Brazil’s GranBio to expand to US, invests in American Process

April 16, 2013 |

Brazilian cellulosic fuels pioneer aims to diversify; tie-up accelerates API business plan.

In Washington DC, at the Advanced Biofuels Leadership Conference (ABLC 2013), GranBio completed the acquisition of a 25% equity stake in cleantech process development company American Process. Under the agreement, GranBio said it will have gained access to a proprietary biomass pretreatment platform that makes it possible to cost-effectively develop cellulosic sugars as a feedstock to a range of biochemicals and biofuels.

Deal terms were not disclosed by the partners.

The companies said that they expect to break ground on their first commercial-scale facility by the end of 2014. The companies will collaborate on a first commercial facility with API technology in Brazil, followed by one in the United States.

Between now and then, American Process will complete demonstration activities on targeted feedstocks at its demonstration-scale plants in Alpena, Michigan and Thomason, Georgia.

Given the wide range of companies now focusing on the production of low-cost cellulosic sugars, the Digest asked GranBio’s Gradin why American Process proved to be the best fit. “Without question, it was important that the technology was sound, but for us the most important differentiation point was the quality of the people in the organization. We saw in API the engineering spirit to make things happen.”

API’s Retsina pointed towards technical capabilities, especially the technology’s capabilities of separating three distinct fractions from softwoods — cellulose, hemicellulose, and lignin. “Softwoods are very recalcitrant and difficult to work with, but 90% of the sugars in the hemicellulose are C6 and that is a distinct difference from other wood, not to mention the plentiful supply of softwood, for example across the southeastern US. Softwood is abundant and today is in surplus — and it’s been one of the myths that, with hemicellulose, you typically have C5 sugars – that’s not the case with softwoods.”

“The investment in API marks GranBio’s entry into the North American cleantech market, said GranBio president Bernardo Gradin. “It is a strategic move by the company, since the pretreatment solution developed by API enables the production of low cost cellulosic sugars, which also fulfill the stringent requirements required for manufacturing biochemicals. With this platform, we will be able to expand GranBio’s activities to other products, beyond cellulosic ethanol.”

“The association with a demonstrated cleantech leader like GranBio strengthens American Process,” said API CEO Theodora Retsina. “Sugar is the new crude — the production of low cost clean sugars is key to unlocking the potential of biomass as a versatile feedstock for fuels, chemicals and bio-products. We are actively partnering with “sugar converters” to complete the supply chain and convert sugars to high margin products.”

GranBio was founded in June 2011 with an initial focus on developing strategic alliances and proprietary technologies that can be industrially scaled in Brazil. GranBio was recently ranked among the top 10 most innovative companies in South America by Fast Company magazine. In January, BNDESPar invested R$600 million in the company for a 15% stake, with the remainder controlled by the Gradin family, which also controls a large interest in Brazilian conglomerate Odebrecht.

GranBio’s next-gen cellulosic ethanol plant in Alagoas, is expected to commence operation in early 2014 with a nominal capacity of 22 million gallons (82 million liters). GranBio is investing $R350 million in the project. The project is now 30% complete, Gradin confirmed to the Digest.

Gradin said that GranBio will continue to utilize Proesa technology from Beta Renewables.

The bottom line

GranBio has striking ambitions in Brazil — with as many as 7 distinct projects over the next few years. One of the clear strategic opportunities is in higher-value chemicals — Brazil currently has a R$30 billion trade deficit in chemicals — and the relationship with API is clearly giving the company the optionality it needs with a cellulosic sugar stream that has the purity necessary for supporting chemical production as well as fuels.

Meanwhile, the opportunities in softwoods give GranBio a variety of near-term options in the softwood-replete North American market — although the Digest would expect that the company will target the lower-cost US wood market before the higher-cost markets in Canada.

In addition — we see American Process benefitting from a first-mover advantage — there are some highly interesting renewable sugars options being developed by competing companies, less far along in their progress towards scale. API’s progress since winning a key DOE award for a first cellulosic ethanol project has proven key in giving the company some “here and now” advantages in the marketplace.

Next step will be to see who the “sugar converters” turn out to be — for example, companies currently working with dextrose sugars using fermentation or biocatalysts.

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