Algae’s Secret Investor

| October 25, 2012

Who’s poured $116M into Algenol and Aurora Algae? Now we know, it’s Reliance.

Back in early 2010, a lot of data began to accumulate suggesting that Reliance Industries Limited, the petroleum, chemicals, telecom and manufacturing conglomerate, was going to make a bet on algae in the fuels and chemicals space.

Reliance — for those less familiar with India’s corporate landscape — is a South Asian behemoth. It’s the country’s largest private-sector company in terms of revenue and earnings, and ranked in the Global Fortune 100 last year.

Observers of the growing momentum behind algae at Reliance were surprised this year when no investments were announced, either for a large-scale internal investment or a strategic investment in one of the leading early-stage companies. We sure were confused by the inactivity here in Digestville.

Turns out that Reliance has been investing all along. Quietly. Big.

A Credit Suisse report on the company, (see page eight of the report, downloadable here), revealed that Reliance has invested a total of $116 million (Rs6.2 billion). $93.5 million (Rs5.0 billion) in Algenol and 22.5 million (Rs1.2 billion) in Aurora Algae.

The latest on Algenol

In September, in the opening plenary session at the Algae Biomass Summit, Algenol CEO Paul Woods revealed that the company, at its 4-acre, outdoor Process Development Unit in Lee County, Florida, had achieved continuous production of ethanol at the 7,000 gallon per acre level. That’s a substantial increase over the company’s original target of 6,000 gpa, and were achieved in outdoor operation under normal operating conditions.

We profiled the developments at Algenol most recently here in “Take it to the Limit: Algenol and rising yields in advanced biofuels.”

The latest on Aurora Algae

We highlighted the opening of Aurora Algae‘s demonstration scale project in Western Australia as #2 among Algae’s Big 2012 – 5 Huge Events, in our survey from September, “The Big A: Little algae go Big, Industrial and Global, and just as eco-friendly as ever.”

Earlier this year, we wrote: “Word has been sneaking back to the United States from Australia that Aurora Algae is well into a $100 million capital raise from a combination of existing and new investors, and is aiming at an IPO later in the year to fund its growth from a 6-acre demonstration unit to a small commercial facility of 250 acres, and then potentially to thousands of acres in its next iteration.”

More about that in “Aurora Algae, Making it Happen in the Never Never.”

More perspective on Aurora and Algenol

A common point between the two technologies. Neither use freshwater – both focusing on saline-based strains. We listed them among the top 4 companies “heading for commercialization now” among “saltwater-based, Civilization-Saving, Bioenergy Technologies worth watching”.

You can read more about their progress, and that of Sapphire Energy, Joule Unlimited and more in “Aquadudes: 15 saltwater-based energy technologies here to save the day.”

The Reliance signals from 2010

The Hindu first detailed Reliance’s interest in algae-based biofuels back in April 2010, following a presentation by M. Ganapati, President, Corporate Planning, Reliance Technology Group on the ‘Biofuels Scenario in India’. “Algae seems to be the most promising feed stock. Microalgae are uncellular biofactories that can provide oil from sunlight and carbon dioxide,” Ganapati said at the time. The Hindu aded that RIL hinted that it might be “considering a proposal on setting up of a biofuel refinery, and called for selective government “investment grants to biofuels which will facilitate the update of biofuels.”

The signals from 2011

At the Digest, we were convinced enough of Reliance’s intent that we listed their interest in making a big bet in the sector — though we flagged renewable chemicals and biobased products, rather than fuels — at #5 in our Top 10 Biofuels Predictions for 2011. The other corporate investor we focused on DuPont — went on to make a huge investment with the acquisition later that year of Danisco and its Genencor enzymes unit. But what appeared to be inactivity at Reliance left us puzzled.

The signals resume in 2012

But there continued to be rumblings from the world of algae. In an interview with the Digest, Dr. Jose Olivares, the head of the NAABB algae R&D consortium, said:

“I think India is a force to contend with because of their long history with algae, but at this point they are trying to determine out how best to enter into the biofuels industry. We are very fortunate, from a NAABB perspective, to be partnering with Reliance Industries Limited, which is one of the largest petrochemical companies in the world and is located in India. They have two of the world’s largest refineries and they are in the top 20 petrochemical producers in the world.  Reliance Industries is in the process of developing a strategy for biofuels and algae biofuels in particular. We are very privileged to be partnering with them in developing this strategy.”

We also noted that Reliance, along with the Indian Council of Agricultural Research, Council of Scientific and Industrial Research, sponsored an international summit, “Algae for Sustainable Development” in partnership with The Energy and Resources Institute (TERI) and the Indian Phycological Society. The February meeting attracted participants from 11 countries while looking at “Biofuels from algae, marine farming of macroalgae, carbon sequestration, nutraceutical and protein supplements from algae, and effluent remediation.”

The Bottom Line

It’s a serious level of investment, clearly aimed at the commercialization phase, given the stage that both Algenol and Aurora have reached in their respective pathways — and it comes from a serious company.

What exactly Reliance is seeing in the data streams that it would have been provided, in the course of considering and making investments at those levels, remains undisclosed. Clearly, though, Algenol and Aurora are in a position to provide data from their pilot and demonstration operations, not simply from the lab. Suggesting that they have substantially de-risked their technology and are in a position to go to the commercial phase.



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