 "BioAmber and CJ CheilJedang to set up bio-succinic acid plant in China")
Canadian renewable materials company BioAmber Inc and South Korean-based CJ CheilJedang Corporation (CJCC) have agreed to form a joint venture in China to produce up to 36,000 metric tonnes of bio-succinic acid annually and commercialise the output in Asia.
The goal is to competitively produce bio-succinic acid in China and quickly penetrate the world’s largest succinic acid market. This can be achieved rapidly, cost effectively and with limited capital investment by retrofitting an existing CJCJ fermentation facility with BioAmber’s succinic acid technology.
CJCJ would incur all capital costs required to retrofit their fermentation facility, including the capital needed during plant commissioning and startup, and production would begin in Q1 2018. If market demand were to subsequently exceed production capacity, the joint venture could expand production through debottlenecking and/or additional investment. The partners would also have a mutual right-of-first-refusal to retrofit additional CJCJ fermentation facilities globally.
CJCJ will control 65 percent stake in the JV, while BioAmber win own 35 percent. The JV will pay BioAmber a technology royalty for having access to BioAmber’s proven bio-succinic acid technology, and will pay CJCJ a tolling fee for producing bio-succinic acid on behalf of the JV. 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 CJCJ bio-succinic acid manufactured at its Sarnia, Ontario plant, so that CJCJ can undertake market development in China and South Korea in the first half of 2017.
“This joint venture would allow us to quickly penetrate the Chinese and broader Asian market and accelerate cash flow and earnings for our shareholders. It would also serve as a blueprint for the build-out of additional bio-succinic acid production with very limited capital investment,” stated Jean-Francois Huc, CEO, BioAmber.
Dr Hang Duk Roh, head of CJ CheilJedang Bio, said, “This JV is an opportunity for CJCJ to leverage BioAmber’s unique, low pH yeast technology and utilise our existing fermentation assets more effectively in order to competitively supply the growing market for bio-succinic acid in Asia.”
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