In California, Solazyme and Dow Chemical announced a contingent off-take agreement in which Dow has agreed to purchase from Solazyme all of its requirements of non-vegetable microbe-based oils for use in dielectric fluid applications through 2015, contingent upon Solazyme’s ability to supply such oils within agreed specifications and certain terms and conditions of the sale.
These new, renewable and biodegradable bio-based dielectric insulating fluids offer increased fire safety thanks to higher flash points and provide additional functionality that may improve the operating efficiency and extend the useful life of transformers.
Concurrently, Solazyme and Dow have entered into a Phase 2 Joint Development Agreement (JDA2), an exclusive, multi-year extension of the current joint-development agreement including accelerated commercialization timelines based on Solazyme’s rapid progress in the production of tailored algal oils.
JDA2 enables additional application development work to be conducted by Dow, due to Solazyme’s accelerated ability to scale up their uniquely tailored algal oil feedstocks. Consumption of Solazyme’s algal oil feedstocks is expected to significantly exceed the minimum estimated volumes of 8.5 million gallons (29,000 metric tons) starting in the second half of 2013 and through 2015. The off-take agreement contemplates that final pricing for the oil will be linked to certain items including Solazyme’s sugar-based feedstock costs.