BASF: Biofuels Digest’s 2014 5-Minute Guide

Company description:

BASF is the world’s leading chemical company, ranked by sales. Its portfolio ranges from chemicals, plastics, performance products and crop protection products to oil and gas. BASF had sales of €72.1 billion in 2012 and more than 110,000 employees as of the end of the year.

In addition to being the leading chemical company, BASF is the largest global producer of BDO.

BDO and its derivatives are widely used for producing plastics, solvents, electronic chemicals and elastic fibers. The starting materials for the production of conventional BDO are natural gas, butane, butadiene and propylene. BASF currently produces BDO and BDO-equivalents at its sites in Ludwigshafen, Germany; Geismar, Louisiana; Chiba, Japan; Kuantan, Malaysia; and Caojing, China, and has an annual capacity of 535,000 metric tons. BASF has recently announced the intention of building a BDO complex in China with a capacity of 100,000 annual metric tons.

Rankings

50 Hottest Companies in Biobased Chemicals and Materials: 2013-14, #11

Biofuels Digest Awards

2013-14: Renewable Chemical of the Year — BDO (Genomatica, Lanxess, BASF, Toray)

At the time we wrote: “In November, we knew we had a winner in BDO when BASF announced that it had produced its first commercial volumes of 1,4-butanediol (BDO) from renewable raw material, and is offering this product to customers for testing and commercial use. The production process relies on a patented fermentation technology from Genomatica, based in California.”

The Situation

In its “We create chemistry” strategy, BASF identified growth and technology fields which address new areas of activity
for BASF. At the core are areas driven mainly by world population growth: resources, environment and climate; food and nutrition and quality of life.

“The acquired technologies are a pre-requisite to develop and further strengthen our enzyme technology platform for attractive global market segments. We will use the acquired know-how and technology for the efficient development of future innovative customer solutions,” said Michael Heinz, member of the Board of Executive Directors of BASF SE.

In its recently announced deals, BASF is acquiring industrial enzymes from Henkel, expanding its capability via Direvo to design pig and poultry enzymes to improve animal nutrition via soy digestibility.

Plus, with the C1 license it is acquiring technology via Dyadic to mass produce proteins and enzymes in large tanks — something Dyadic and its existing licensees, have done worldwide, for years, at up to 150,000 liter scale, cost efficiently.
It’s certainly a competitive thrust towards the industrial enzyme businesses of Novozymes and Dupont Industrial Biosciences (in its former Genencor unit) — and a worthy competitor not to be laughed off.

With its investment in Renmatix — the company may well be attempting, as well, to acquire a lower cost feedstock for its mass production platform. Today, microorganisms that generate enzymes, according to Novozymes, “feed on nutrients derived from e.g. maize (corn), soy beans, potatoes or sugars. But the right nutrients for the microorganisms depend on the enzyme which is to be produced. The same applies to the temperature, oxygen level and pH to which the microorganisms are exposed.”

We also are tempted to see the Genomatica license in the context of the Renmatix investment — as that process (which produces, via fermentation, the base chemical BDO, or 1,4 butanediol).
For sure, BASF is busting a move in its industrial fermentation, enzyme and product capabilities. Now they’ve got the “know” to “grow”, even “more” than “before”.

Major Investors

BASF is a public company (BAS.F)

Past Milestones

In September 2010, BASF and Solix Biofuels announced an agreement to investigate the use of algae to produce certain chemicals for BASF. Solix is a developer of algae cultivation technology systems and will test multiple algae species in its proprietary growth system, AGSTM, for BASF.  “Algae represent a fascinating addition to BASF’s technology portfolio,” said Harald Lauke, President of the Specialty Chemicals Research at BASF, “as they offer the potential to produce a number of exciting specialty products. After surveying the algae industry, we chose to work with Solix based on its knowledge of algal biology and the strength of its AGS.”

In January 2012, BASF announced plans to invest $30 million in the US technology firm Renmatix, as part of Renmatix’ $50 million Series C investment round.

In October 2012, BASF and Purac, a subsidiary of CSM, are establishing a joint venture for the production and sale of biobased succinic acid. The company will be named Succinity GmbH and will be operational in 2013, with an annual capacity of 10,000 metric tons. The two companies are currently modifying an existing fermentation facility at Purac’s Montmélo site near Barcelona, Spain.  This is complemented by plans for a second large-scale facility with an annual capacity of 50,000 metric tons of succinic acid.

In May 2013, BASF announced that it plans to begin production of 1,4-butanediol based on renewable feedstock (renewable BDO) using Genomatica’s patented process. The one-step fermentation process is based on sugars as a renewable feedstock.
“The BDO plant is subject to market performance,” notes BASF spokesman Klaus-Peter Rieser. ” BASF will in due course announce its decision on the location, capital expenditure and start of construction for the plant. Currently we anticipate a plant capacity of 50,000 tons per year.”

The license agreement allows BASF to build a world-scale production facility that will use the Genomatica process to manufacture BDO based on renewable feedstock. Under the terms of the agreement, Genomatica will continue to advance its patented renewable BDO production process technology based on sugars while BASF will produce renewable BDO, which will be available in the second half of 2013 for sampling and trials.

In May 2013, BASF completed the acquisition of Henkel’s detergents enzyme technology, comprising production hosts, various detergent enzymes, as well as corresponding intellectual property. Under the agreement, Henkel retains the right to use the technology for captive demand including back-licensing provisions. Enzymes are key performance ingredients in modern detergent formulations. Expanding into enzyme technology will increase BASF’s position as an innovation leader in the home care and industrial & institutional cleaning industry.

In September 2013, Verenium announced it had entered into a definitive merger agreement with BASF Corporation, a leading chemicals company, under which BASF will commence a cash tender offer for all of the outstanding shares of Verenium’s common stock. Under the terms of the merger agreement, holders of outstanding shares of Verenium’s common stock received $4.00 per share, representing a 56% premium to the volume weighted average closing price of Verenium’s common stock in the six months prior to announcement of the transaction.

Also in September 2013, BASF inaugurated its new research facilities in Research Triangle Park. This $33 million expansion includes 80,000 square feet of office, laboratory and greenhouse facilities. BASF expects that the State of the art research facilities will enable further innovation in crop protection and plant biotechnology. The facilities include a climate-controlled greenhouse and laboratories for plant biotechnology research as well as a new environmentally-controlled insect production facility to expand insect control research.

In November 2013, BASF produced its first commercial volumes of 1,4-butanediol (BDO) from renewable raw material, and is offering this product to customers for testing and commercial use. The production process relies on a patented fermentation technology from Genomatica, based in California. The fermentation process uses dextrose as a renewable feedstock. The quality of BDO based on renewable raw material is comparable to petrochemical-based BDO. BASF plans to expand its portfolio with selected BDO derivatives based on renewable feedstock, including Polytetrahydrofuran.

In December 2013, BASF and Renmatix signed a non-exclusive joint development agreement to scale up the Renmatix Plantrose process for the production of industrial sugars based on lignocellulosic biomass. The parties have agreed to key financial terms for future commercial licenses, which BASF can exercise at its discretion. The collaboration follows BASF’s $30 million investment in Renmatix in January 2012.

“The train is out of the station,” said Renmatix CEO Mike Hamilton, “in terms of the demand for renewable materials. What has to happen now is to enable very cost effective, sustainable solutions to meet that demand.”

Future milestones

BASF chairman Kurt Bock said in 2012 that the company aims to grow 2 percentage points above chemical production and thus increase sales by an average of 6 percent per year until 2020. Total: 115 billion euros. And they’re targeting emerging markets. And they are all over the sustainability angle.

Business Model:

Owner/operator

Competitive Edge:

Breadth of partnerships, investments, activities – 11 to date in all — Dyadic, Direvo, Novozymes, Cargill, Verenium, Renmatix, Henkel, Allylix, Purac and Genomatica.

As Markus Pompejius, BASF’s Head of Research Bioactive Materials and Biotechnology said on stage “it is always about financial return, but not at all exclusively about financial return. It is about additive technology — leading BASF to make strategic investments in Genomatica and Renmatix in the near-to-present as well as undertake the acquisition of Verenium.”

Research, or Manufacturing Partnerships or Alliances.

In May 2013, BASF and Dyadic announced that the two companies have entered into a non-exclusive worldwide research and license agreement for Dyadic’s C1 production host technology. Under the terms of the license agreement BASF will be able to use Dyadic’s patented and proprietary C1 technology for gene discovery, expression and the production of enzymes and other proteins. BASF will fund research and development at Dyadic’s research labs.

Under the terms of the agreement, BASF will be able to use Dyadic’s patented and proprietary C1 platform technology to develop, produce, distribute and sell industrial enzymes in certain fields for a variety of applications.  BASF will fund research and development at Dyadic’s research lab in The Netherlands. In addition to this funding, BASF has agreed to pay Dyadic a $6 million upfront license fee, and certain research and commercial milestone fees, as well as royalties upon commercialization.

Also in May 2013, BASF and Direvo Industrial Biotechnology GmbH said that they would broaden their collaboration on enzymes for animal nutrition. Direvo, an expert in enzyme development and optimization, and BASF will jointly develop a highly efficient protease for pig and poultry.

Proteases are increasingly used in animal nutrition to improve the digestibility of soy. This new product will help animals to make better use of the nutrients in their diet and support their well-being. The protease will complement BASF’s feed enzyme portfolio and is a further step for BASF to extend its position as a leader in animal nutrition.

Stage:

Commercial