BioAmber and CJCJ plan to establish a JV in China to produce up to 36 kton/year of bio-succinic acid
Recent news about one of the main
actors in the bio-succinic acid arena (learn more about succinic
acid biorefineries). BioAmber Inc. is
trying to penetrate the Asian market and, to this end, it has signed a
non-binding letter of intent with South Korean-based CJ CheilJedang Corporation ("CJCJ"),
a subsidiary of the CJ Group. Under the terms of the agreement, BioAmber and
CJCJ plan to establish a joint venture in China to produce up to 36,000 metric
tons of bio-succinic acid annually and commercialize the output in Asia (see
the press
release).
The goal is to retrofit an existing
CJCJ fermentation facility with BioAmber's technology to market bio-succinic
acid in China rapidly, cost effectively and with a relatively low investment. CJCJ
would incur all capital costs required to retrofit its fermentation plant,
including the capital needed during plant commissioning and startup. Production
would begin in Q1 2018. If market demand were to subsequently exceed production
capacity, the joint venture could expand it. The partners would also have a
mutual right-of-first-refusal to retrofit additional CJCJ fermentation
facilities globally (CJCJ operates in the United States, China, Indonesia,
Malaysia and Brazil).
Figure 1. Succinic acid biorefinery
of BioAmber in Sarnia (extracted from BioAmber web page)
CJCJ would own 65% of the JV and
BioAmber would own 35%. The JV would pay BioAmber a royalty for having access
to its bio-succinic acid technology and would pay CJCJ a tolling fee for
producing bio-succinic acid on its behalf. Both partners would be entitled to a
share of the profits equal to their respective equity ownership positions.
The proposed joint venture is subject to certain
conditions, including technical and commercial due diligence, with the
definitive agreements expected to be signed by July 2017. As part of the letter
of intent, BioAmber will be selling bio-succinic acid manufactured at its
Sarnia plant to CJCJ so that it can undertake market development in China and
South Korea in the first half of 2017.
