Issue Date: March 2, 2015
Thailand Targets Biobased Chemicals
Beaches, smiles, and spicy food. Those are the images that come to the minds of many people at the mention of Thailand. And any tourist visiting the country will easily get plentiful helpings of all three. But in recent years, Thailand has developed ambitions to become known for something else. It wants to be the global leader in biobased chemicals.
PTT, the country’s state-owned group of oil and petrochemical companies, is the driving force of this ambition. The conglomerate is probably best known in biochemical industry circles for owning a 50% stake in NatureWorks, a U.S. producer of lactic acid-based resins. But this is just the tip of the iceberg. PTT has invested in a stable of biobased chemical firms worldwide, several of which are now looking to set up in Thailand.
Be it in cars, chemicals, or shipbuilding, Thailand normally assumes the role of follower. Many modern industrial facilities operate in Thailand, but they are usually based on technology developed abroad.
In biobased chemicals, in contrast, Thailand has a chance to become an industry leader by applying innovative technologies to the country’s bountiful supply of sugar and cassava, a starchy root grown in the tropics. PTT, a professionally managed and cash-rich behemoth, is the ideal candidate to help Thailand succeed in this area.
“As the world’s top exporter of cassava and number two exporter of sugar, Thailand has plenty of feedstock for bioprocesses,” says Anucha Somjitchob, vice president of green chemicals business strategy and development at PTT Global Chemical. Thailand also offers suitable infrastructure, he adds. Biochemical producers can either integrate with sugar mills and cassava processors or make use of the facilities in our existing chemical industry parks, he says.
PTT stepped up its biobased chemicals investment in 2010 as the new strategy was crystallizing, Somjitchob says. The firm’s goals are to raise the industrial level of Thailand, create high-paying jobs, and add value to Thailand’s agricultural output. All companies in the PTT group are expected to play a role.
An early step in the plan was buying into NatureWorks, which operates a commercial-scale resins plant in Nebraska. Since then, the Minnesota-based company has announced that it’s interested in setting up in Thailand, where it would use sugar or cassava instead of corn as its polylactic acid raw material.
PTT also bought a majority stake in Myriant, a Massachusetts-based company that produces succinic acid at a 14,000-metric-ton-per-year plant in Louisiana. Thailand is a strong candidate for a second succinic acid plant, Somjitchob says.
Indeed, PTT is bullish on the outlook for succinic acid, an intermediate that has long been made synthetically and is now being produced by several firms from biobased raw materials. Global demand for succinic acid from renewable sources is already 40,000 metric tons per year and should increase as prices come down, Somjitchob figures. “We foresee that the next plant to be built will have a production capacity of 60,000 metric tons,” he says.
A PTT joint venture with Mitsubishi Chemical should boost demand for succinic acid. The partners are building a 20,000-metric-ton plant in Thailand that will produce polybutylene succinate, a biodegradable plastic. The facility will first make use of succinic acid obtained from petrochemical sources, then switch to biobased sources. Interestingly, one supplier will be a Myriant competitor, Montreal-based BioAmber, which last year signed a contract to supply the PTT-Mitsubishi venture with succinic acid from a plant it’s building in Ontario.
PTT’s expansion into biobased chemicals appears sound to Sarah Hickingbottom, business development manager for oleo- and biochemicals at LMC International, an agribusiness consulting firm in Oxford, England. Thailand has feedstocks, the country is strategically located between India and China, and the government is behind the plan, she says.
But it’s not yet clear how PTT plans to sell its biomaterials, Hickingbottom notes. Will the group market them as cheap materials to price-sensitive Asian customers, or will it sell them as premium green manufacturing supplies to buyers in North America and Europe? The answer will depend on production costs, which in turn are affected by plant design, plant scale, and government policies. Most important, she notes, feedstocks account for 50% of operating costs.
PTT’s Somjitchob acknowledges that the biobased chemicals industry faces cost challenges when compared with the petrochemical industry, partly because its plants tend to be smaller. “No one has ever built a bioplastic plant with a production capacity of 500,000 metric tons,” a scale that is common in the petrochemical industry, he notes.
A separate challenge, Somjitchob says, is making biobased chemicals acceptable to users. “You need to create materials that are easy to handle, not some sort of strange resin that plastic converters find hard to handle,” he says.
To facilitate the development of Thailand’s biobased chemicals industry and reduce production costs, PTT is setting up “biochemical hubs” that will provide infrastructure and feedstock to chemical producers, be they affiliated with PTT or not. Located next to sugar mills, the biohubs will feature cogeneration plants, water treatment facilities, and other utilities.
“We want the hubs to be attractive enough to convince technology owners to invest in Thailand,” Somjitchob says. PTT, he adds, has signed preliminary agreements with three sugar companies that will supply either sugar or cane juice as feedstock. The first biohub is scheduled to open for business in 2018 in central Thailand. In the future, other PTT biohubs will provide cassava starch as feedstock.
Somjitchob may soon have the chance to test the biohub concept. Last November, the Dutch firm Corbion Purac announced that, like NatureWorks, it wants to build a plant in Thailand for lactic acid-based polymers—provided it can sign up customers for at least a third of its output. If the Corbion plant moves ahead, it will show that PTT is not alone in believing in Thailand’s biobased chemicals potential.
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