🏭 The Column: June 28, 2024

Good morning. I wasn’t planning on taking the last couple of weeks off, but I was wrapping up a consulting project that consumed most of my free time. Things might be pretty spotty in July and early August (more details on this soon!), but for now let’s get you caught up:

Things Happened:

Solugen scored some new funds

I started writing this newsletter for a lot of reasons, but part of what kept me going was the feedback loop. With each edition I felt myself getting closer to answering what was unanswerable: why are we still making chemicals the same way we’ve always made chemicals? There’s no brief answer that does the nuance justice, but in a nutshell it boils down to the physical limitations of thermochemical processes, the cost advantages that come from scaling up those processes, and switching costs that have now been accumulating for half a century. (I’ve written at length about this before, but this piece is probably most aligned to my current views.) I give you this preamble because either a) I’m nuts, or b) we’re about to inflect. To be specific: it’s very hard to get the US government to validate both your technology and your ability make money from that technology—especially when it’s a chemical process technology. The fact that the Department of Energy is providing Solugen with a $214m conditional loan (aka “the Tesla loan”) should not be taken lightly, and nor should the award they were granted by the Department of Defense to make benzylamine. With their second site now under construction and the funds to grease the gears, Solugen—unlike most chemical startups—is actually going to get a chance at bat. [LINK]

Ambercycle and Hyosung’s deal

I doubt that Ambercycle reinvented the wheel when it comes to the depolymerization of PET—it is well understood that you can do transesterification to undo the esterification that made the PET in the first place. That’s partly why there are so many companies attempting to commercialize their very own PET depolymerization process. What makes Ambercycle different is that they targeted a specific market with great incentive alignment: fast fashion lovers currently bear the shame that their (plastic, ahem, polyester) clothes will likely be landfilled someday, but textile producers want to keep producing textiles, and textile buyers want to keep selling clothes. It’s a win-win-win if someone (probably the retailers) can encourage consumers to bring in their old clothes, and then turn around and sell them clothes that contain a recycled fraction. It’s not a novel idea, but Ambercycle seems to have done it well enough that their recycled PET meets the same spinnability standards that virgin material does, which is ultimately how they landed agreements with Inditex and now Hyosung. (Also, fun fact: their founders are out of UC Davis, just like the founders of Origin Materials.) [LINK]

Petrochemical probs in Australia

Back in early 2020, just before the onset of COVID, Indorama made what appeared to be an ordinary acquisition: they bought Huntsman’s ethylene oxide (EO) and derivatives complex in Botany, Australia. Unfortunately, ExxonMobil shut down one of their Australian refineries when COVID spiraled out of control, which suddenly put Qenos, a Chinese petrochemical company, in a bad spot because they were now forced to import LPG to make ethylene—the only source of ethylene feeding Indorama’s newly acquired plant. Exxon never returned and Qenos’s situation got worse when they had a cooling tower collapse, forcing a shut down. Qenos decided it was a lost cause, so they mothballed it and sold the site to a real estate developer, forcing Indorama to shut down as well, and now it’s all over (since apparently importing ethylene with VLECs isn’t a good solution). Kinda crazy how one company leaving (Exxon) killed off Australia’s petrochemical industry. [LINK]

Other Things Happened:

Mitsubishi is expanding its photosensitive polymer production in Japan for photoresists. Mitra Chem and Sun Chemical are going to build the first iron phosphate plant in the US. Lummus’ propane dehydrogenation process was selected for a new plant outside Qingyang City, China. Shell is moving forward with its CO2 capture plans in Canada. Entegris scored a $75m grant under the CHIPS act to build a new semiconductor materials plant. Trinseo commissioned their PMMA depolymerization pilot plant. Exxon is going to sell its lithium to South Korea’s SK On. Grace just licensed its technology for two new polyproplyene plants in India. Encina signed a supply agreement with BASF. Dow Chemical is getting into the mechanical recycling of plastic waste. Austria’s OMV is converting its refinery into a sustainable fuels refinery. Cyclic Materials is going to supply Solvay with recycled rare earth metals.