Bio-chemical plant considering Sarnia for $500M US build

BioAmber has taken out an option on land at TransAlta’s Bluewater Energy Park as a potential site for a second bio-chemical plant.

The Montreal-based company is producing bio-succinic acid, a building block chemical made from corn syrup, at a $141-million plant it opened last year at the Lanxess Bio-Industrial Park on Vidal Street in Sarnia.

The TransAlta site is just down the road on land that was once home to a Dow Chemical plant in Sarnia.

BioAmber CEO Jean-Francois Huc said during a year-end financial results conference call this week that the company has secured an option on a parcel of land at TransAlta, “in close proximity to the power plant,” allowing “behind the fence” access to electricity and steam.

TransAlta operates a natural gas-powered electricity plant at the site, and supplies steam and electricity to several local industries.

It also offers electricity at lower prices to its energy park tenants by avoiding transmission and other costs typical charged when taking power from the province’s electricity grid.

While it was completing work on the Sarnia bio-succinic acid facility, the company’s first commercial-scale plant, BioAmber said it was making plans for a second, and looking at sites in Sarnia and the U.S.

In a recent filing to the U.S. Securities and Exchange Commission, BioAmber said the second plant is expected to cost approximately $500 million US to build, and “would be commissioned in late 2018 assuming we achieve a financial close in late 2016.”

According to the filing, an agreement with Vinmar would see that company take a 10-per-cent equity stake in the new plant. BioAmber is also seeking other minority equity partners, as well as government support in the form of low-interest loans and loan guarantees.

BioAmber received $52-million in federal and provincial government loans and grants for its first Sarnia plant.

The second plant it wants to build would produce approximately 200,000 metric tons annually of bio-succinic acid, with the majority converted into butanediol and tetrahydrofuran used to make engineering plastics, polyurethanes, biodegradable polyesters, spandex and other specialty chemicals.

“We’re very much focused on plant one, but we do have our second site location down to just a few sites,” Huc said.

“The one in Canada is on TransAlta property, less than a mile from our current facility in Sarnia.”

The U.S. sites are in Louisiana and Iowa, he said.

“It typically takes six to 12 months to get a new plant operating smoothly, and it can be longer for a first-of-kind technology,” Huc said.

“So, we are very pleased with the progress we made in Sarnia during the fourth quarter.”

BioAmber employs 60 people at its Sarnia plant.

“The fact that we started to produce and sell product within two months of starting up the plant is a tremendous achievement,” Huc said.

It was announced earlier this year that BioAmber’s partner in the Sarnia plant, Mitsui and Co., has invested an additional $25 million in the venture, increasing its stake from 30 per cent to 40 per cent.

“Looking ahead to 2016, we are confident that we will leverage our success to date, and continue to ramp up production and sales,” Huc said.

TransAlta’s Bluewater Energy Park is also where London-based Comet Biorefining recently announced it plans to open a plant by 2018 that will convert corn stalks and leaves, as well as wheat straw, into dextrose sugar for use in making biochemicals and fuels.

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