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Cost Of Production Scale-Up Weighs On Biobased Chemical Firms

Second Quarter: Production hurdles keep industry in the red

by Melody M. Bomgardner
August 18, 2014 | A version of this story appeared in Volume 92, Issue 33

It will be some time before making certain chemicals from sugars is profitable, if the second-quarter results posted by six biobased firms are any indication. For now, the best measure of success is progress toward operating smoothly at commercial scale.

On that score, Solazyme leads the group with its large-scale plants in Brazil and Iowa. The company is producing and shipping algal oil and lubricant products while it works to increase output at the sites. It booked $9.0 million in product revenues for the quarter.

For Amyris, shipments of the intermediate farnesene from its facility in Brazil have started up again after downtime in the first quarter. The plant opened more than a year ago, but output in 2013 was less than expected. Amyris told investors that sales should double this year, leading to positive cash flow.

Solazyme and Amyris earned the most revenue of the six firms but also reported the biggest losses for the quarter, showing the need for deep pockets to reach commercial-scale production. Amyris shored up its cash in May by selling $75 million in convertible notes.

Gevo, which raised $18 million in a stock sale, has a new strategy at its Luverne, Minn., plant. To ensure a revenue stream, the company is producing isobutyl alcohol in a single fermentation tank and making traditional fuel ethanol in three other vessels. “I like where we’re headed at Luverne—I think we’ve turned the corner,” CEO Patrick R. Gruber told analysts in a conference call.

In contrast, operations at KiOR’s cellulosic fuels facility in Columbus, Miss., have been suspended, and the firm is running out of cash. In a filing with the Securities & Exchange Commission, the company said it faces problems with “structural bottlenecks, reliability, mechanical issues, costs, and catalyst performance.”

The future looks brighter at BioAmber. The succinic acid producer says its Sarnia, Ontario, plant is on budget and set for completion in early 2015.



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