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Editorial: Biochemical benchmark

October 14, 2015 - The grand opening of the BioAmber bio-succinic acid facility in Sarnia, Ont. was an important benchmark for Canada’s biochemical and biorefining industry.

The company, which chose Sarnia over approximately 100 other sites throughout North America, created the largest succinic acid production plant in the world.

What made the proposed project so solid in the beginning was the fact that it was a rare business opportunity where a bio-based version of a chemical was actually cheaper to build than the petroleum-based version.

But that was when oil was around $100 per barrel and gas prices in the Greater Toronto Area hovered around the $1.40/litre mark. Now oil sits in the $45 per barrel range and gas near $1.00/litre. Certainly, the business model for BioAmber has seen some wild fluctuations since the project got off the ground just a few years ago.

Granted, all businesses have been impacted in one way or another by the volatility in the oil and gas sector. But when a project that costs over $140 million to build is reliant on a model that has oil prices at or near the peak conditions of a few years ago, the impact is even greater.

It would have been easy for BioAmber to pack its bags and shutter the project until the oil and gas market once again settles in at a higher price point. But they didn’t. They kept building, and that deserves our recognition.

BioAmber has forged ahead and, in August of this year, officially opened its bio-succinic acid facility. The acid, which is transported in a crystalline form, is used as a building block chemical with applications in the making of plastics, automotive parts, electronics and lubricants just to name a few. The bio-production of the product is based on fermentation technology and, at the end of the day, is arguably a better quality succinic than its petroleum-based counterpart.

Then there is the environmental impact to take into account. According to information provided by the company, the production of bio-succinic acid versus petroleum-based succinic acid, at the capacity volume that BioAmber will produce in Sarnia, produces 210,000 tons less greenhouse gas emissions or the equivalent of taking 45,000 cars off the road.

On the business side, the company had already established take-or-pay contracts for over 50 per cent of its production, and additional supply agreements will cover the majority of the outstanding production volumes.

The BioAmber model, from the financial structure utilizing government funding to the establishment of a solid customer base before the first crystal of acid is produced, has become the example for other biochemical and biorefining operations to follow. Companies in Canada looking to commercialize their products at a national or global scale now have the example they need to build a successful gameplan for moving forward with expanded operations. BioAmber has done the legwork on this one, and now others can, in theory, follow their lead.

 

 


October 14, 2015
By Andrew Macklin


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