U.S. sustainable chemicals company BioAmber and South Korean-based CJ CheilJedang Corporation plan to establish a joint venture in China to produce up to 36,000 metric tons of bio-succinic acid annually and commercialize the output in Asia. Their goal is to competitively produce bio-succinic acid in China and quickly penetrate the world’s largest succinic acid market. “This – both companies say – can be achieved rapidly, cost effectively and with limited capital investment by retrofitting an existing CJCJ fermentation facility with BioAmber’s succinic acid technology”.
CJCJ, which is a subsidiary of the CJ Group and a global leader in the area of industrial biotechnology, with innovations in fermentation and purification technologies, would incur all capital costs required to retrofit their fermentation facility, including the capital needed during plant commissioning and startup, and production would begin in the first quarter of 2018. If market demand were to subsequently exceed production capacity, the joint venture could expand production through debottlenecking and/or additional investment. The partners would also have a mutual right-of-first-refusal to retrofit additional CJCJ fermentation facilities globally.
CJCJ would own 65% of the JV and BioAmber would own 35%. The JV would pay BioAmber a technology royalty for having access to BioAmber’s proven bio-succinic acid technology, and would pay CJCJ a tolling fee for producing bio-succinic acid on behalf of the JV. Both partners would be entitled to a share of the profits equal to their respective equity ownership positions.
The proposed joint venture is subject to certain conditions, including technical and commercial due diligence, with the definitive agreements expected to be signed by July 2017. As part of the letter of intent signed by the two companies, BioAmber, which is headquartered in Plymouth (Minnesota, USA), will be selling CJCJ bio-succinic acid manufactured at its Sarnia (Ontario) plant, so that CJCJ can undertake market development in China and South Korea in the first half of 2017.
“While we remain focused on ramping up our Sarnia plant and building a second plant in North America, this JV is an opportunity for BioAmber to accelerate the deployment of its bio-succinic acid technology on a global scale without capital investment,” stated Jean-Francois Huc, BioAmber’s CEO. “This joint venture would allow us to quickly penetrate the Chinese and broader Asian market and accelerate cash flow and earnings for our shareholders. It would also serve as a blueprint for the build-out of additional bio-succinic acid production with very limited capital investment.”
“This JV is an opportunity for CJCJ to leverage BioAmber’s unique, low pH yeast technology and utilize our existing fermentation assets more effectively in order to competitively supply the growing market for bio-succinic acid in Asia,” added Dr. Hang Duk Roh, Head of CJ CheilJedang BIO.
by Eddy Smith