NatureWorks doubling Ingeo PLA resin capacity

At a luncheon on June 24 at NPE2009, Natureworks President and CEO Marc Verbruggen said the Minnetonka, Minn.-based company, expects to reach that 300 million pound-per-year production level within the next three years.

That means PLA will reach that milestone faster, a total of roughly 9-11 years, than most conventional petroleum-based commodity polymers did.

According to data from McKinsey & Co. that Verbruggen presented, it took polycarbonate, polypropylene and high density polyethylene only six years to reach 300 million pound production, but it took PVC 13 years and polystyrene, low density PE and PET 12 years.

“After you hit 300 million pounds, you can grow significantly into the billions of pounds,” he said. “Our aim is to be a larger player in the commodity plastics business, not a niche player.”

How fast NatureWork reaches 1 billion pounds of production depends on the price of oil. But the latest Verbruggen expects that to occur is 2019, based on a projected oil price of $50 barrel. If oil jumps back to $150 per barrel, the 1 billion mark will come as early as 2014 and by 2019, production could hit 3.5 billion pounds, he said.

BCC Research projects the bioplastics market will more than double from 541 million pounds in 2008 to 1.2 billion pounds by 2012.

“In this economic climate, we don't look as good as [we did] last September,” he said. “But people are still purchasing PLA for environmental and strategic reasons. Those two value drivers have not gone away. Countries around the world have figured out that if your economy depends on foreign oil, that is not the smart thing to do. They realize that bioplastics allows them to have a domestic feedstock.”

Others at the luncheon, sponsored by plastics and bioplastics distributor Jamplast Inc. concurred with the assessment that bioplastics are going to be a growing part of the plastics business — regardless of the price of oil.

“We are more expensive than petroleum-based polymers at $70 for a barrel of oil, but cheaper when oil is $100 per barrel, said Frederic Scheer, chairman and CEO of Cereplast Inc. of Hawthorne, Calif., which blends PLA into other polymers to make bio-based and renewable polymers.

He said Cereplast will double its sales in 2009 and double them again in 2010.

“In a very tough environment, if you want growth, look at bioplastics,” Scheer said. “We are doubling our revenue stream every single year … even in this tough environment. We are competitive, offer less volatile pricing, a similar or better performance and you do not need to make any investments in your process to run our resin. We also offer a better carbon footprint and a reduced environmental footprint.”

“Oil supplies will run out,” said John Moisson Jr., founder, president and CEO of Jamplast, which is based is Ellisville, Mo. “It is a matter of if, not when. The demand for oil-based goods is rising. For every four barrels of oil used, only one new barrel is added to the supply.

“Energy will be our challenge into the 21st century,” he said. “We have to take an active role in finding and utilizing other natural resources to bring our goods to market.”

There are also other factors driving bioresins, including the need of companies to reduce their carbon footprint and the green movement, Moisson said. “Retailers and brand owners will be pushing very hard to meet the expectations of consumers for environmentally friendly products.”

Verbruggen said NatureWorks remains on target with its expansion plans to choose a site — probably in Europe or Asia — for a second plant by mid-2010, with startup scheduled for 2013 or 2014.

Verbruggen added that NatureWorks still expects to have an agreement by the end of the year with an undisclosed partner to build a PLA recycling plant in the United States. The plant will likely have an annual capacity of 5 million pounds.

“Sometime in 2009-2010, we will start to recyle Ingeo. The volumes of PLA are enough that recyclers will be willing to sort and recycle it whether they are in North America, Asia or Europe,” he said.

Verbruggen said disposable products account for 60-70 percent of NatureWorks sales today, but that the company's ultimate goal is to move into durable goods.

He also said that he would not be surprised if NatureWorks, which currently makes PLA from corn, locates its next plant in North America next to a biorefinery.

“Six months ago, if you asked me when we might use cellulose materials as a feedstock, I would have said 10 years,” Verbruggen said. “But big oil is getting into biorefineries and we are going to see the first biorefinery in five years. Then we will be using switchgrass.”

If, or when, the company makes the switch to a cellulose feedstock, biopolymers could be in the driver's seat from a cost standpoint. “We could [have] the most cost-effective feedstock out there,” Verbruggen said.

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