1998: A Watershed Year for the Carbohydrate Economy?
150 years ago, ours was a carbohydrate economy. Clothes, houses, vehicles, chemicals, dyes, and inks were derived from plants. Before the Civil War, ethanol derived from corn, molasses and potatoes was the nation's best-selling fuel and industrial chemical. The first plastic was called "celluloid" because it was taken from cotton, which is 94% cellulose. There are many more examples, but now nearly every product produced is based on petrochemicals. Just as the final nail was hammered into the coffin of the carbohydrate economy, the pendulum began to swing back.
From our perspective, 1998 is shaping up as a breakout year for the carbohydrate economy. Half a dozen large plants may break ground or start production next year. If that happens, the story of biochemicals and tree-free fibers may well move from the pages of specialized newsletters to the business sections of national newspapers.
Following are some of the startups shining brightly on our radar screen.
International Polyol Corporation, Inc. (IPCI)
IPCI expects to start construction on a 100,000-ton facility in South Africa that uses a patented bioreactor design and separation process to convert sucrose from sugar cane to intermediate chemicals like ethylene glycol, propylene glycol, glycerin and butanediols. IPCI expects to duplicate this facility in the U.S. by the year 2000, using glucose from corn as its feedstock.
Terry Brix, IPCI's president, dubs these facilities "green petrochemical factories" because they will be producing chemicals identical to those produced from oil. Most biochemical products, such as citrus-derived cleaners or sugar-derived plastics, match the performance of petrochemicals but are not chemically identical to them. Brix proposes to beat the oil refineries at their own game by manufacturing identical products at a significantly lower cost. The market is huge. Ethylene glycol alone has annual U.S. sales of 4 million tons and is used for making antifreeze, polyester fibers and polyethylene terephthalate (PET) bottles and film.
Contact Terry Brix, IPCI: 541-822-8400
Heartland Fiber
In 1988 this company expects to build an $89 million dollar pulp mill in Nebraska. Here, more than 300,000 tons of cornstalks will be converted into about 150,000 tons of pulp, which will be sold to paper mills in the Great Lakes region. This will be the first cornstalk-derived paper made in the United States since the 1920s.
Contact Dale Lindquist, Heartland Fibers: 308-236-2166.
Alta Goldboard, Inc.
Wheat straw deliveries are expected to begin in August 1998 to a new $110 million strawboard plant located near Edmonton, Alberta. The plant will be capable of producing 200,000 square feet of three products: particleboard, medium density fiberboard and Microstrand. Microstrand will have a flake core and fiber surfaces. The Golden Stem Cooperative will supply 300,000 tons of wheat straw a year to the plant.
Contact Volker Stockmann, Alta Goldboard, Inc.: 403-440-3320
Kafus Environmental Industries: The Growth of a Green Giant
When Kafus Capital Corporation changed its name in September 1997 to Kafus Environmental Industries it marked the evolution of a venture capital company into an environmental manufacturing company.
Founded in 1995, Kafus has never thought small. According to Mike MaCabe, senior vice-president of Key Bank, a financial advisor to Kafus, the company plans to spend $1 billion in global development in the next four years. "We are in the business of buying the technology and seeing it through to building manufacturing plants," explains Scott Summerville, a company spokesperson. Kafus' activities in the past year alone indicate a company on the move.
- Kafus acquired a majority interest in CanFibre Group Ltd. CanFibre's plant will produce medium density fiberboard from 100% dry urban wood waste. In July, Enron Capital and Trade Resources Corporation invested $21 million for 34% of Kafus, making Kafus a partner with Enron, and one of the world's largest integrated natural gas and electricity companies. Kafus invested $19 million to help finance a $120 million plant in Riverside, California. In September Enron announced it would be supply the 9 megawatts of power required at the medium density fiberboard plant on a 10-year contract. Kafus' European subsidiary plans to build two new fiberboard plants in Holland and England in 1998.
- Kafus owns 80% of Kenaf Paper Manufacturing. A Texas kenaf newsprint plant, capable of producing 60,000-75,000 tons of newsprint per year, has already pre-sold 60% of its production capacity to the Texas newspaper industry. It is expected to become operational by the end of 1998. Kenaf grown on about 10,000 acres will provide the fiber for the $130 million plant.
In September, Kafus announced plans to build another kenaf newsprint plant in southern California in 1998. That mill will require 15,000 acres of kenaf annually and produce approximately 80,000 tons of newsprint.
- In September, Kafus acquired 90% of Camden Agro Systems Inc. (CASI). CASI is an Ottawa-based company specializing in adding value to animal feed and organic fertilizers. To combat the nitrate pollution of water caused by many major poultry producers, CASI developed an economical process for converting poultry manure into organic fertilizer products.
Contact Scott Summerville, Kafus: 888-333-5377
http://www.kafus.com/
Schlegel Corporation: Replacing Fossil Chemicals With Biochemicals
The century-old Schlegel Corporation of Rochester, New York, is reaping the benefits of its shift to biochemicals. An employer of 500, it manufactures window and door seals for the automotive industry, electromagnetic shielding for the electronics/telecommunications industry, and plastic components for various industries.
Seven years ago Schlegel embarked on a mission to make its workplace safer by ridding it of many hazardous chemicals, primarily methylene chloride (which has been linked to cancer and to damage of the central nervous system, heart and liver).
To help achieve its goal, Schlegel turned to outside expertise. In an alliance with with Rochester-based Terpene Technologies (TT), they developed a product formulation based on terpenes, which are chemicals derived from citrus fruits or conifers. TT's product line, called Tarksol, is derived from pine trees.
At first glance Tarksol would appear to be economically unappealing. After all, its price is twice as much per pound as its fossil chemical-derived competitor, methylene chloride. But when we look at the overall cost comparison, Tarksol steals the show.
Schlegel was able to use 80% less Tarksol to achieve the same results as methylene chloride, a net savings of $9600 a year. The cost to dispose of a single waste drum from the hazardous methylene chloride-based cleaning system was $300, versus $160 for the non-hazardous terpene-based cleaning system. Cost savings, $2,500 a year.
The largest single source of savings resulted from reduced regulatory costs. Schlegel avoided an investment of $50,000 in one-time engineering costs to continue using methylene chloride, plus $10,000 a year in ongoing regulatory costs. Using the terpene-based solvent saved the company more than $70,000 the first year. Total savings: $72,000 the first year and $22,000 each following year.
Contact Tracy Pope, Schlegel Corporation: 716-427-7200 ext. 5123
Contact A. Richard Koetzle, Terpene Technologies: 716-235-3860
http://www.schlegel.com/
Phenix: A Bumper Crop of Homegrown Innovation
Phenix Biocomposites is a truly homegrown enterprise. The company grew out of a science project by an elementary schooler Molly DeGezelle. In 1991 the 11-year-old added glue to newspapers and baked the mixture in a microwave. The result, a material tough enough to withstand seven dishwasher cycles, attracted the interest of a local group, Rho-Delta. They took the product under its wing, substituted soy flour for glue, attracted $275,000 in grants from soybean research groups and a $100,000 loan from Minnesota's Agricultural Utilization Research Institute (AURI) and developed a remarkable new material called Environ.
Composed of about 50% recycled newspapers and about 50% food-grade soy flour, Environ panels come in a variety of rich colors, and range in thickness from 1/8 inch to 1 inch. Currently the material is used for plaques, statue bases, table tops and flooring.
One and a half times harder than oak and similar in appearance to granite, Environ can be easily sawed and sanded ("Looks like stone, works like wood" was Phenix's initial slogan). Environ has the modest structural properties of medium density fiberboard, but as Workbench magazine observed, "its main feature is good looks, not brawn."
A $1 million investment from USDA's Alternative Agricultural Research and Commercialization Center (AARC) triggered private investments of $4.5 million, and in May 1994, a full-scale production facility was established. 50 employees work in a 40,000-square-foot building, with a capacity to manufacture one million square feet of panels per year. Virtually all the raw materials used are collected or harvested within 50 miles of the manufacturing plant.
When it came time to build a larger manufacturing facility, Phenix Biocomposites started a cooperative, Phenix Manufacturing. Several hundred soybean farmers invested $15 million toward a new $23 million facility. Scheduled to open in August 1998, the 160,000 square-foot plant will be capable of annually manufacturing 45 million square feet of product, and will employ 150. In addition to Environ the plant will make a new product called New Stone, a cheaper and structurally stronger alternative to Environ. It will also be the first manufacturer to produce particleboard from soy stalks.
Phenix Manufacturing will sell its product at cost to Phenix Biocomposites and share 50-50 in the profits. The manufacturing cooperative owns a significant percentage of Phenix Biocomposites. Thus Phenix Biocomposites benefits from lower cost products from the manufacturing cooperative, and the farmers benefit from current and future research and development efforts of the investor-owned firm.
Molly and her father still own shares in the company. She will soon be graduating from high school. If the company goes public, she may be able to pay her way through college.
Contact Lanny Jass, Phenix Manufacturing and Phenix Biocomposites: 507-931-9787
From The Carbohydrate Economy, a publication of the Institute for Local Self-Reliance