ADM ending bioplastic venture with Metabolix; Telles to dissolve

Published: January 12, 2012 6:00 am ET

Related to this story

Topics Materials, Mergers & Acquisitions, Suppliers, Sustainability

DECATUR, ILL. (Jan. 12, 11:45 p.m. ET) — Bioplastics resin maker Metabolix Inc. is losing its commercial alliance with agricultural company Archer Daniels Midland Co. ADM said the venture is not delivering sufficient results, and that financial projections for the business are too uncertain.

As a result,  Telles LLC, the Lowell, Mass.-based sales and marketing alliance formed to commercialize Mirel polyhydroxyalkanoate resin, will be dissolved.

Metabolix said it is conducting a strategic review of its business plans for 2012, and that it will restructure its bioplastics business and downsize its operations.

"Clearly, we are disappointed by ADM's decision to withdraw from Telles. While this is a setback, we remain committed to successfully commercializing PHA bioplastics. Over the past few years, we now have proven the technology at industrial scale and believe that we now have the opportunity to launch this business with a different business model," said Metabolix CEO Richard Eno, in a news release.

Metabolix reported a loss of $29.2 milliion for the nine month period that ended Sept. 30, on sales of $567,000.

The news may be surprising — given plastics industry interest in biopolymers. However, there has been more activity recently in the sector of the bioplastics market that involves making conventional resins made from plant materials, including polyethylene, PET and polypropylene. Corn-based polymers like PHA have been receiving less attention.

A recent report from Ceresana Research, for example, predicted that the global bioplastics market will grow an average of 17.8 percent annually to reach $2.8 billion in sales in 2018 — but much of the growth will come from non-biodegradable bioplastics.

Telles may be a well known brand, but the company's is still in start-up mode. Last year the company started Mirel production at a 110-million-pound-per-year plant in Clinton, Iowa. According to Decatur-based ADM, there are about 90 full-time ADM Polymer employees in Clinton, plus a small number elsewhere that support Telles sales efforts in Europe. The company will evaluate the impact on staffing of its decision to exit the joint venture.

According to a news release, ADM Polymer may provide PHA fermentation services for Metabolix during a three-year period following termination of the agreement.

"We have analyzed our business portfolio, identifying areas that are not delivering sufficient results now or are not expected to deliver sufficient results within a reasonable timeframe,” said Mark Bemis, president of ADM's corn division, in a release. “We have had a good working relationship with Metabolix, and the fermentation technology performed well at our facility. Unfortunately, uncertainty around projected capital and production costs, combined with the rate of market adoption, led to projected financial returns for ADM that are too uncertain. Therefore, we have decided to exit the business as permitted by the commercial alliance agreement with Metabolix.”

ADM said it is evaluating other uses for its fermentation plant in Clinton. ADM said it will take a one-time pretax charge of $300 million to $360 million in the second quarter as a result of its decision.

Metabolix said it plans to continue to focus on development of renewable industrial chemicals, and that it will "retain a core team in its bioplastics group to provide continuity with the technology and market."


Comments

ADM ending bioplastic venture with Metabolix; Telles to dissolve

Published: January 12, 2012 6:00 am ET

Post Your Comments


Back to story


More stories

Image

Contigo, Avex buy lets Newell Rubbermaid leapfrog new bottle development

July 22, 2014 4:11 pm ET

Newell Rubbermaid Inc. is ready to accelerate its move into the reusable water bottle business with the purchase of two on-the-go drinkware brands.    More

Image

Plastics industry blasted for stance in green building debate

July 22, 2014 2:45 pm ET

The plastics industry has taken high-profile stance in the debate over green building standards. The result, today at least, is that it's getting...    More

Image

Plastics help designers bring home the gold

July 22, 2014 2:15 pm ET

Products with polymer content received multiple gold recognitions in the 2014 International Design Excellence Awards.    More

Image

Munson Machinery expanding assembly, testing operations

July 22, 2014 2:02 pm ET

Munson Machinery Co. Inc. is expanding its headquarters factory by about one-third in Utica, N.Y., where the company makes mixing, blending and size-...    More

Image

Evolving with the times helps Ohio's Midwest Elastomers prosper

July 22, 2014 12:53 pm ET

Midwest Elastomers Inc. is 35 years old this year, and if the company hadn't abandoned its roots and evolved, it long ago could have gone the way of m...    More

Market Reports

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Plastics Recycling Market Review & Outlook 2014

This special report from Plastics News examines the North American plastics recycling industry and provides insight into indicators that impact market viability, including Resin pricing trends for virgin and recycled market material and historical Resin production trends for post- consumer and industrial waste.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events