🏭 The Column: Apr 26, 2024

Good morning. In case you missed last Friday’s round up, The Column is back.

When I started writing this newsletter I struggled to differentiate between “startups” and other ventures that sound like startups, but don’t seem to be doing anything special. A “startup” in this context is a new company that is trying to commercialize a new technology. If the new company isn’t commercializing a new technology, they are probably just applying existing technologies in a new way. These are fundamentally different ventures—the former takes on technical and market risk for potentially huge upside, and the latter mostly takes on market risk for a relatively small upside.

We see this sort of thing a lot in the world of molecular recycling. There are companies developing new technologies (like Mura), but there are far more companies who are just applying or tweaking an existing technology, like pyrolysis, to a new application (i.e. the depolymerization of plastic waste). These pyrolysis players are licensing the technologies, contracting out the engineering and construction, and then choosing to either a) own and operate that plant, or b) sell it to someone who will. In short: I think it’s helpful to think of new ventures in the world of chemicals along some sort of startup-to-developer spectrum, because even those closest to the startup end (someone like Solugen or Origin Materials) still leverage plenty of existing technologies.

Things Happened:

Encina isn’t going to Pennsylvania

Encina falls closer to the developer end of the startup-to-developer spectrum. We’ve talked about them quite a bit in the past, but to be brief: they want to depolymerize mixed plastic waste with a fluidized bed cracker—which is expected to make a large fraction of aromatics (specifically benzene, toluene, and xylene) and propylene. They announced plans to build their first site in Pennsylvania about two years ago, and things have been inching along since then (I’ve seen various supply and purchase agreements, and licensing deals with folks like Technip Energies). But apparently the locals weren’t big fans of the environmental impact that the plant would have (pretty ironic for a recycling plant), so Encina is going to shift its focus elsewhere. I recommend they try to make it happen in Saudi Arabia. Surely if the Kingdom is willing to fund Neom they can fund something like this! [LINK]

Anellotech and Technip signed a deal

If you’ve been in this industry for a while you’ve probably heard of Anellotech. I don’t know this for a fact, but it seems like David Sudolsky (an industry vet) helped George Huber (currently a professor at the University of Wisconsin) commercialize Huber’s process back in 2008, which catalytically converts non-food biomass into a benzene, toluene, and xylene (BTX) rich product stream. They’ve recently been trying to convert plastic waste into BTX, and the deal they just signed with Technip is focused on commercializing that process. I’m not sure how that process would differ from Encina’s, but I’d be curious to find out if you want to let me know. [LINK]

Standard Lithium started up its demo-scale DLE plant

The last time we talked about Standard Lithium (SL) was when Lanxess decided to opt out of their potential joint venture, forcing SL to seek financing elsewhere. Now, I don’t know how that is going, but I do know that financing technical risk isn’t straightforward—a bank like Citi might help SL issue some bonds, but SL would prefer the interest rate on those bonds to be as low as possible. (Chemical companies are more willing to take on risk than bondholders, so the cost of capital would have been lower for SL should Lanxess have remained interested.) Regardless, maybe that’s why SL subtitled its recent press release “Further Derisks DLE Process With Testing Planned Using Full-Scale Commercial Equipment Over the Next 6 Months”. Maybe SL should work with New Energy Risk? (That’s not an ad, I’m just a fan.) Another interesting bit worth noting is that SL is actually using Koch’s process technology, which puts SL closer to the developer end of the spectrum. [LINK]

SK Capital sold Foremark after 7 years

D.B. Western built an integrated formaldehyde, urea-formaldehyde concentrate (UFC), and monoethanolamine triazine (MEA triazine) plant in La Porte, Texas back in 2001. I’m not sure what their initial thinking was, but it seems like MEA triazine was their flagship product and formaldehyde was a necessary input. Maybe UFC was how they balanced out the remaining formaldehyde. Either way, they were eventually acquired by SK Capital in 2017, and SK Capital immediately started doing what private equity firms do: rebranding, cost cutting, selling parts of the company, strapping on new parts, optimizing the product suite, etc. The only big difference I see at a glance is that Foremark sells monomethylamine triazine (MMA triazine) now, as well as some other new scavengers. For what it’s worth, MMA triazine seems hard to make. [LINK]

Other Things Happened:

Fujifilm decided on growth plans for its CDMO and electronics businesses. LyondellBasell is opening a new joint recycling site in China. Ineos Styrolution had to shut down its plant in Sarnia for maintenance. Pili is now making bio-based anthranilic acid. Asahi Kasei is going to build a battery separator plant in Canada. A new fullerene joint venture was born. LyondellBasell and Covestro restarted their POSM unit.