C4 explosion: Cobalt Technologies is the latest four-carbon biobased player to expand capacity

April 15, 2013 |

c4Cobalt expands into Asia and butadiene with two new strategic investors.

What’s up with the C4 molecules? Why is everyone building capacity?

In California, the Digest has learned that Cobalt Technologies is announcing this morning a strategic relationship with two prominent, but undisclosed, Asian chemical companies for the development of butadiene from a range of biomass feedstocks.

Under the terms of each strategic agreement, technology development is expected to be completed in 2014 with construction of a first commercial‐scale biorefinery in Asia, which would be expected to come onstream by 2015. In each case, the partners made an equity investment in Cobalt. Work to date has demonstrated, according to Cobalt, that the biomass-to-butadiene path can be highly competitive with petroleum‐based butadiene under current market conditions.

We hear figures of up to 100,000 tonnes per year for the chemical plant capacities — but consider that as “speculative grade” intelligence for now.

More about butadiene

asia-tires

Think tires. You can think eco-tires if you like — but whatever you do, think about expanding auto sales in Asia, which has left India, for one, very much in the import side of the equation on butadiene. Polybutadiene Rubber (PBR) and Styrene Butadiene Rubber (SBR) are two types of synthetic rubbers used globally to replace natural rubber.

But also: think 6,6 nylon. It is also a key intermediate chemical used by INVISTA for the production of adiponitrile (ADN), which in turn is a critical intermediate chemical used in the manufacture of nylon 6,6.

Capacity building is on, globally. LyondellBasell and BASF are building in the EU. But Asia is where the tire growth is.

ICIS has reported that 1.18m tonne/year of new plants are expected to come online in China this year alone. ICIS has also been reporting for the last couple of years now on destructive levels of volatility in naphtha prices — naphtha is the primary petrochemical feedstock for butadiene. Further, the growth in natural gas production — and prospects for more growth, especially to serve C2 markets such as ethylene, are expected to reduce naphtha production and further tighten the production outlook for C4 chemicals, especially butadiene.

$23.2M raised

In commenting on the news, Cobalt Technologies chairman and CEO Bob Mayer noted that the anonymity of the partners, at this time, demonstrates the strategic importance that developing butadiene capacity has for the partners, in the rapidly growing Asian butadiene market. Mayer also noted that the partners plan to build or license additional plants to support the high growth in the $40 billion global butadiene market.

Concurrently last week, Cobalt filed documents with the SEC revealing that it had completed a $23.2 million Series E-1 capital raise with 18 undisclosed investors.

“This agreement validates Cobalt’s ability to leverage its biobutanol platform into large high‐value markets for downstream chemicals. With this agreement, we now have a path to fully‐funded, large scale commercial projects in two of the three main geographies for bio‐based projects – Asia and Brazil”, said Mayer. “We believe that our long term focus on using biomass-based feedstock, as opposed to food‐based sugars, has resulted in a technology advantage and lower cost production that is attracting partners worldwide.”

Who are the partners?

Neither Cobalt nor the partners are saying anything at the moment — so why not make some speculative guesses? Here are five to consider:

Sinopec. The largest chemicals company in Asia, and right there in the middle of the Chinese auto boom (which has cooled a bit of late) — trying to figure out how to keep tires on all those cars. Saturation of autos in Eastern China is already said to approaching levels seen in Western countries.

Indian Oil. India is short on butadiene, long-term, auto outlook is highly bullish as the coutry continues to develop — and Indian Oil is already bringing a 138,000 tonne/year butadiene extraction plant online at this time, at its Panipat refinery — and has planned a joint venture for a styrene butadiene rubber (SBR) project.

Reliance Industries. Reliance has been investing in bio, is supplying the Indian marlet, active in butadiene, and likes to make anonymous but significant investments in bio-based companies. It took us a year to figure out that they invested in Algenol. Back in 2010, they identified investments in 100,000 tonnes/year of butyl rubber, 40,000 tonnes/year of poly butadiene rubber (BR) and 75,000 tonnes/year of styrene butadiene rubber (SBR).

Kumho Petrochemical. A major butadiene customer, and the South Korean chemicals player has been investing in macroalgae production.

Malaysian options. Petronas, for one, is already invested in LanzaTech. Ube, Mitsubishi and Korea’s Lotte Group are building capacity in Malaysia — a major player in Malaysian butadiene has been Titan Chemical, which has a project in association with BASF at the Pasir Gudang complex.

It’s also worth noting that the Malaysian Life Sciences fund is deeply invested in Cobalt — and has been active in bringing forward its investments to Malaysia partners as the companies have begun to reach for scale.

Forced to guess — and we love to — we’d point to Reliance and one Malaysian partner.

The C4 explosion

Just last week, Versalis and Genomatica announced the establishment of a technology joint venture for bio-based butadiene from non-food biomass. The resulting process will be licensed across Europe, Asia and Africa by the newly-created joint venture.

Versalis — the chemical subsidiary of Eni — aims at being the first to license the process and build commercial plants. It will also provide over $20 million in funding to Genomatica to support development of the integrated end-to-end process.

Versalis also partnered with Yulex Corporation in January to manufacture guayule-based biorubber materials and will launch an industrial production complex in Southern Europe.

Last December, Global Bioenergies, an industrial biology company, and Synthos, a Polish company in the rubber industry, announced the discovery of a biological pathway to convert renewable resources into butadiene.

In February, INVISTA Technologies and Arzeda. announced a collaboration for the development of new technologies to enable novel bio-derived processes. The initial focus of the collaboration will be on the production of bio-derived butadiene. INVISTA is one of the world’s largest integrated producers of polymers and fibers, primarily for nylon, spandex and polyester applications.

Speaking of INVISTA, last August, LanzaTech and top nylon producer INVISTA (think Lycra and Dacron) have inked a joint development agreement to develop one-step and two-step technologies to convert industrial waste gas carbon monoxide into butadiene. Initial commercialization is expected in 2016.

The bottom line

Butadiene is on the move — but see it in the context of a giant lift in the C4 area — especially as natgas feeds into a naphtha shortage. Right now, there’s no “but” in “butyl”.

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