One billion pounds of carbon-negative plastic, made from greenhouse gas and pure air

July 13, 2015 |

NewlightVinmar signs historic offtake agreement with Newlight Technologies for 1B lbs of AirCarbon plastic.

In California, Newlight Technologies has signed a 20-year take-or-pay off-take agreement with Vinmar International for 1 billion pounds of AirCarbon PHA.

Critical to the deal? Newlight’s catalyst aims to transform the economics of PHA-based plastics, solving low yields and high cost issues that have kept PHA from competing strongly with petroleum-based plastics.

The Vinmar contract provides for the sale of 100% of AirCarbon PHA from Newlight’s planned 50 million pound per year production facility for 20 years.  The contract will also cover 100% of the output from a 300 million pound per year AirCarbon production facility and a 600 million pound per year AirCarbon production facility for a total of up to 19 billion pounds over 20 years.

What is AirCarbon, and what does it do? It’s a PHA-based thermoplastic developed for use in a wide range of products, including films, caps and closures, furniture, electronics accessories, bottles and other applications.

The Newlight breakthrough

By weight, in its most basic form, AirCarbon is approximately 40% oxygen from air and 60% carbon and hydrogen from captured carbon emissions. So far, so good.

What’s the big deal here? Newlight’s 9X biocatalyst generates a polymer conversion yield that is over nine times higher than previous–from a yield ratio of 1:1 to 1:9, enabled by developing a new kind of biocatalyst over 10 years of research that does not exhibit a negative feedback response–fundamentally shifting the cost structure of the greenhouse gas to plastic conversion process, and enabling AirCarbon to out-compete oil-based plastics, such as polypropylene and polyethylene, on price.

Newlight’s biocatalyst works by combining air with methane, and assembling the carbon, hydrogen, and oxygen molecules therein into a long chain PHA-based thermoplastic material.

The Vinmar Gambit

An offtake deal out of the gate, of this magnitude, is the dream of almost every developer of a renewable chemical. But it doesn’t happen for many. What’d different about this one, and where does Vinmar fit in?

Vinmar CEO Vijay Gorodia told the Digest earlier this year, “Over the last few years we have been in contact with a number of companies, primarily the US, and have had discussions. A few things came to the fore. One was that most companies are independents, not part of a very large conglomerate or a very large established company. These independents are very good at developing molecules and technologies, but very few have experience in commercialization.

“So when ready to commercialize, they hire a few marketing and business development guys. They may have had the background to develop a marketing strategy, but they work with a limited number of large US, European and maybe Japanese users, so these independents are generally at the mercy of these suppliers. Their marketing policies revolve around satisfying the needs of the large users. Now typically, these large companies hedge their bets, they are very deliberate and slow and sometimes string more than one company along.

“When it’s time to commercialize and scale up — both equity and debt, as you know, there’s not a lot of money available to fund the debt. Whatever is available, the equity investor and the lender want to know who will buy the product and how long it will take to sell out the whole plant.

“That’s where we come into the picture. We expand the reach beyond 2-3 geographies and a hand full of customers, and we shorten the whole commercialization phase. And we undertake to offtake the whole production for at least the whole of the loan period, which is usually 7-10 years. Now the company can focus on their core competencies, to keep improving the technology, production and reducing the cost.”

Background News You Can Use: Newlight Technologies

Others in the field? Bio-on ready to license new bio-PHA from glycerol technology

ADM and Metabolix get divorced; chilling effect on biofuels IPOs? 

What’s up with plastics? The 10 Hottest, Bossest Renewable Plastic Technologies

What’s up with Newlight? Newlight Technologies: Biofuels Digest’s 2015 5-Minute Guide

What’s up with Vinmar? Vinmar: The World’s Quietest $5B Company Opens Up

See it Now: the Newlight Technologies story

Reaction from the stakeholders

“This contract launches AirCarbon to world-scale volume, and sets Newlight on a path to accomplishing its founding goal of changing how the world makes materials, by harnessing greenhouse gas as a resource,” said Mark Herrema, Newlight CEO and Co-Founder, “With this agreement, we are poised to participate in the growing demand for sustainable materials with a material made by capturing carbon that would otherwise become part of the air.”

“Vinmar is excited to be a part of the growth and development of Newlight’s AirCarbon PHA,” said Kartik Mehta, a senior executive of Vinmar.  “Our long-term off-take contract with Newlight reflects the potential we see for AirCarbon. Demand for plastics will continue to grow globally and AirCarbon addresses an important need in the market. We believe Newlight’s advanced high-yield technology, unique cost structure, and commercial-scale operations position AirCarbon to effectively compete in the market on price and performance, allowing us to market AirCarbon PHA to a broad range of customers,” he added.

Vinmar International is a leading marketer and distributor of chemicals with sales of over $4.5 billion in 2014 and annual volumes that exceeded 6.5 billion pounds of petrochemicals.  With over 450 staff in 35 countries, Vinmar possesses the global presence and experience needed to cost effectively accelerate development of the growing market for AirCarbon.  This in turn will allow Newlight’s commercial team to focus on production capacity expansion, high margin derivatives, key accounts, and joint technology and application development.

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