Danimer Scientific SPACs and Mitsubishi Chemical Invests in Carbon Fiber Manufacturing

The Weekly Chemical News Roundup

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Mitsubishi Chemical to Establish CFRTP Pilot Facility

Mitsubishi Chemical is looking to establish a pilot manufacturing facility for Carbon Fiber Reinforced Thermoplastic or CFRTP. A pilot facility is a way to say “experimental manufacturing” or small scale manufacturing.

When chemists or chemical engineers want to see if something works “outside of the lab” we might look to run what we call a pilot trial, which is smaller than full scale manufacturing, but bigger than anything we could do in a lab. These small scale trials allow us to work out whatever problems we might not see in the lab before we go to large scale manufacturing. This is especially important when working with continuous or semi-continuous processes where turning on a manufacturing process can cost upwards of 5-10 thousand dollars not to mention the costs of operating to dial in the performance or the risk of starting up, having things fail catastrophically, and taking manufacturing capacity away from the company for a few days to a few weeks depending on what goes wrong. Having pilot manufacturing capacity allows scientists and process engineers tasked with scale-up to move faster to commercialization and work out any potential safety issues before you make things at scale.

Carbon fiber reinforced thermoplastic or CFRTP is essentially putting carbon fiber into the big six thermoplastics like PET, PP, HDPE, or into engineering thermoplastics like Polycarbonate (PC). Mitsubishi chemical is betting that CFRTP is going to play a big role in the future because they nearly as strong as metals or their thermoset counterparts, which use things like epoxy or polyurethane to hold the carbon fiber together and are difficult to produce. Strong lightweight materials are what we are going to need to extend the range of vehicles, make airplanes more fuel efficient, and reduce the weight of materials we might send into space.

Mitsubishi is also back integrated into making carbon fiber through polyacrylonitrile or PAN so this makes a lot of strategic sense. Lightweight materials are going to play a pivotal role in our future as I talked about in my 2020 Annual Letter.

Danimer Scientific Goes Public via SPAC

Doris De Guzman of Green Chemicals Blog wrote about Danimer Scientific going public through Live Oak Acquisition Corporation, which was listed on the NYSE as a special purpose acquisition company (SPAC) and essentially merges itself with a private company (Danimar) and then changes its name to “take” the company public. A SPAC is a way to directly list companies on a public stock exchanges without the traditional oversight of investment bankers.

Danimer Scientific makes poly(hydroxyalkanoates) or PHAs. These polymers have long been considered viable alternatives to PET and PE through their physical properties, but instead of being synthesized from oil and industrial chemical processes they can be grown or fermented from plant based feedstocks such as oils and sugars. Think of microbes as being little mini chemical reactors and their products are PHAs. Additionally, once those plastics are used or spent they can be composted. You can read more about PHAs here. Metabolix was also a company that attempted to commercialized PHAs, but sold their business and closed up shop.

Doris Guzman writes that:

Danimer Scientific is currently producing and shipping Nodax™ at a commercial scale level from its existing facility in Winchester, Kentucky. The Company has partnered with key manufacturers and consumer products companies such as PepsiCo, Nestlé, Bacardi, Genpak, WinCup, Columbia Packaging Group, Kemira and Plastic Suppliers Inc. Based on signed and pending contracts, the Company said it is fully sold out of all of its production in its Kentucky facility and will use its increased capital base to significantly increase production in seeking to meet the expected current and long-term demand of its customer base.

This is a huge move for Danimer and I hope they are successful. The world needs more alternatives to the big six polymers and to fully realize the benefits of Nodax PHAs the world also needs access to more industrial composting facilities. Companies like Danimer Scientific are critical if we want to solve the plastic waste problem. I would ask Danimer investors to give them sometime to become profitable.

I’ve been following Doris Guzman’s Green Chemicals Blog for years. She is the real deal. Definitely check her out.

BASF Launches Circular Economy Program

There are so many press releases from companies in the chemicals space that it can be hard to keep up. BASF back on Dec 10th launched their Circular Economy Program. The BASF strategy is focused on the following:

  1. Battery recycling

  2. Additives for plastic recycling (mechanical recycling)

  3. Chemical Recycling of plastics (pyrolysis of plastic)

  4. Sustainable organic raw materials (i.e. plant based chemicals for personal care products)

Battery recycling is interesting because we have a finite amount of lithium and a rapidly growing application of lithium ion based batteries. The mode of recycling the lithium is going to have to be chemical and developing the technology to do this efficiently with high yield should be a big value capture for BASF, especially if oil companies start moving into chemicals.

Additives for mechanical plastic recycling are I think appeasing shareholders, but I do not see this as a major growth area. Sure, you can develop some diblock copolymers that will act as compatibilizers for immiscible plastics like PET and PP, but if chemical recycling really takes off the way I think it will then additives for mechanical recycling will be a small, but likely profitable business.

Chemical recycling was the hot topic of 2020 and it will continue to be a hot topic despite the occasional company being exposed as elaborate schemes to embezzle money from investors like Loop Industries. Using spent plastic as a new carbon source makes a lot of sense and I believe it to be better than feedstocks like CO2 because the pyrolysis oil from spent plastics looks more like refined petroleum and the industry knows how to utilize that stuff.

Sustainable organic raw materials for personal care to me is a low volume high margin play that also doesn’t necessarily align with some of the AgChem that BASF might be involved in with their other business segments. This type of business seems extremely niche, but could be an interesting route to provide high margin and low volume chemicals either to personal care companies or as starting materials for medicinal chemistry.

Solvay Sells Surfactants Business

The chemical giant is executing on a plan that involves selling part of the surfactants business to private equity firm OpenGate Capital. Solvay has been going through a long term transition from buying Cytec in 2015, to selling its biobased epichlorohydrin technology in TechnipFMC in 2018, and to selling its barium, strontium, and sodium percarbonate business in November 2020 to Latour Capital.

I think the company wants to be well positioned in industries that aim to do good in the world by doing well in its businesses. Solvay’s G.R.O.W. strategy is focused on growth from the advanced materials business sustained by the chemicals business and excellence from the niche chemicals business and this plan is from their new CEO Ilham Kadri, a former scientist and executive from Cytec.

AMP Robotics Raises $55 Million For Robotic and AI Enabled Sorting

The capital is in the form of a Series B round:

Led by XN with participation from new investors Valor Equity Partners and GV as well as existing investors Sequoia Capital, Sidewalk Infrastructure Partners, Congruent Ventures, and Closed Loop Partners. This new round of funding follows a $16 million Series A financing led by Sequoia Capital in November 2019

Material recovery is critical in making our waste streams, particular plastic waste streams, higher in purity. If we can reach a state of pure recycling streams of PET, HDPE, LDPE, PS, PP, and PVC then mechanical recycling of those plastics gets easier. Further sorting based on color can also enable these recycled materials to command a higher price in the market. This news is excellent and fits in with my series on solving plastic waste.

Tony


The views here are my own and do not represent those of my employer nor should they be considered investment advice.

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