Bioresin maker Cereplast Inc. will add three new production lines by the end of the year at its California plant - and the 4-year-old firm already is looking to add a second plant in the ``corn belt'' of the Midwest.
Cereplast currently is making a dozen different grades of bioresin on two twin-screw extrusion lines in Hawthorne, Calif. A third line was to be in place by mid-August, and two more will be running by the end of September, Cereplast founder and Chief Executive Officer Frederic Scheer said in an Aug. 2 phone interview.
By the end of the year, Cereplast will have the capacity to make 40 million pounds of product annually. Eight of Cereplast's resins are based on polylactide resin supplied by NatureWorks LLC of Minnetonka, Minn., while the remaining four are starch-based. All of Cereplast's products are biodegradable and compostable
Hawthorne-based Cereplast expanded its site to 25,000 square feet in January, and Scheer anticipates more expansion will be needed in 2007.
The firm already is scouting for a site for a second plant in the Midwest in order to be closer to agricultural raw materials. Scheer said he hopes to have the second plant up and running sometime in 2007 or early 2008.
``We're going to need more capacity to handle demand for our material,'' he said, adding that he expects the market for renewable plastic to grow at least 20 percent annually for the next several years.
``I expect at some point that oil prices will go down,'' he said. ``But people now realize that for single-use, disposable applications, it makes more sense to use products that are made with renewable resources and to save oil for other applications.
``People are aware of that and aware of problems with global warming, and they're concerned,'' Scheer added. ``In that sense, our value proposition is very appealing, and we expect to do a substantial amount of business.''
Cereplast is capitalizing on a growing interest in bioresins, spurred by a jump in prices of standard oil-based resins.
Commercially, Cereplast's big move came in May, when the firm announced that Atlanta-based thermoformer Duni Corp. would use Cereplast resins to make compostable food packaging for restaurants and consumer products. In February, Cereplast also filed for two new patents on starch-based and nanomaterial-based resins.
In another recent development, Cereplast announced Aug. 7 that packaging firm MeadWestvaco Corp. of Stamford, Conn., is using Cereplast material to develop extrusion-coated paperboard. Solo Cup Co. of Highland Park, Ill., then will use the paperboard to make cups that can hold liquids as hot as 220° F. Cereplast officials said the cup will be the first hot product approved by the Biodegradable Products Institute.
Scheer has been working to commercialize bioresins for 15 years, previously serving as president and majority owner of Biocorp. Inc., a bioresin maker that folded in 2001. He then launched Biocorp. North America - a separate company - in 2002. Scheer briefly changed that company's name to Nat-Ur before renaming it Cereplast in 2004.
Cereplast went public in over-the-counter trading in November. The stock opened at 20 cents per share but was at around $1 in late trading Aug. 2. The firm raised about $14 million in its initial public offering, with Scheer retaining ownership of 51 percent of the firm.
Sales for 2005 are expected to hit the $1 million mark, almost doubling the firm's 2005 levels. Cereplast posted a loss of $1.1 million on sales of $543,000 in 2005.
NatureWorks, a division of Cargill Inc., has led the way in the growing bioresin market by opening a 300 million-pound-capacity plant in Blair, Neb., in 2002. The firm got a big boost last year when retail giant Wal-Mart Stores Inc. began using NatureWorks PLA in some of its produce containers.
Other bioresin firms making recent news include:
* Metabolix Inc. of Cambridge, Mass., which has filed for an IPO and is building a 100 million-pound-capacity plant in Clinton, Iowa, in partnership with Archer Daniels Midland Co. The plant will make sugar-based polyhydroxyalkanoate resin and is expected to be operating in the summer of 2008.
* DuPont Co. of Wilmington, Del., which will commercialize two new bioresins next year and plans to derive 25 percent of its sales from products made with renewable resources by 2010. DuPont is using organic feedstock produced at a plant in Loudon, Tenn., through a joint venture with Tate & Lyle LLC of London.
* BASF AG of Ludwigshafen, Germany, will begin production in Europe later this year on its PLA-based Ecovio resin and on its polyester-based Ecoflex-brand resin - with some of the first applications expected to be in compost bags and packaging films.