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New Bio Fuels Joint Venture Targets American Ethanol Market

| Editor: Dominik Stephan

(Picture: DSM/Poet)
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(Picture: DSM/Poet)

Dutch Royal DSM and Poet, an American producer of bioethanol team up for a commercially viable production of biofuels from corn crop residues. Both companies agreed on the formation of a joint venture to develop and market technologies for the production of cellulosic ethanol.

Heerlen/The Netherlands; Sioux Falls; South Dakota/USA – Dutch life–science company Royal DSM and Poet, a leading American ethanol producer, announced the formation of a joint venture to demonstrate cellulosic bio-ethanol on a commercial scale and to market the corresponding technology licenses. Cellulosic ethanol is believed to be the next step in the development of biofuels by many industry experts.

Based on the companies' proprietary and complementary technologies, the joint operation POET-DSM Advanced Biofuels is expected to start production in the second half of 2013 at one of the first commercial-scale cellulosic ethanol plants in the United States, speakers said.

The firms plan to produce alcohol from corn crop residues, using a enzymatic hydrolysis followed by fermentation. A first demonstration plant named Project liberty is currently under construction at Poet's corn ethanol plant in Emmetsburg, Iowa. The capacity of this facility is expected to be around 20 million gallons in the first year, growing to approximately 25 million gallons per year.

Bio fuels From Residues

After a successful demonstration, the joint–venture company intends to replicate and license the technology to additional plants to be built at the other 26 corn ethanol facilities in Poet's portfolio, but also license it to other ethanol producers in the US and abroad. The companies expect a huge future demand for state-–of–the art biorefineries: Recently, the U.S. Environmental Protection Agency (EPA) estimated that in the United States as many as 350-400 new bio-refineries will have to be constructed by 2022 to meet the volume requirement of 16 billion gallons/year of cellulosic bio-ethanol under the Renewable Fuel Standard.

The joint venture will be held in equal parts by DSM and Poet, having its headquarter at Poets main site in Sioux Falls, South Dakota. The initial capital expenditure by the joint venture in project Liberty will amount to about $250 million. The closing of the joint venture is subject to regulatory approvals and other customary closing conditions.

This optimis is also reflected in the fact that both partners believe the joint venture to be profitable in the first full year of production (2014) and to deliver substantial revenues with above-average EBITDA contribution in the medium/longer term.

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