Perfume additives and shark liver oil substitutes first; the broader market for diesel over time.
That’s the revised business plan, in a nutshell, for Amyris Inc., which has formally moved into commercial production. Amyris has created a genetically modified yeast that converts sugar cane syrup into hydrocarbons via fermentation. (Ordinarily, yeast would convert sugar into alcohol, a chemical with less value.)
The company now has two fermenters with a 100,000-liter capacity in operation that are capable of producing 17 million liters a year of Biofene, Amyris’ base hydrocarbon, says Jeri Hilleman, CFO. Amyris -- one of the first companies to champion exploiting GMOs to produce industrial chemicals and fuels -- has sold some Biofene, but not in volume. Most of its revenue comes from reselling fuel from other parties.
Amyris can sell Biofene itself, or add molecules to it to convert it to diesel or designer lubricants and then sell those higher-value products. A substantial portion of the early Biofene production will go to make squalane, a perfume additive. Now, squalane is usually made from heavy olive oil, which can be tough to find because of the demand for extra virgin olive oil, or shark liver oil.
Squalane can sell for $25 to $30 a liter, compared to $5 to $9 a liter for lubricants.
In 2012, Amryis will expand production by installing fermenters with a 600,000-liter capacity. It will also devise new families of hydrocarbons. Biofene contains 15 carbon molecules. In the future, Amyris will try to make 10-carbon molecules for, potentially, the jet fuel and polymer market, as well as 5-carbon molecules, like isoprene, for making rubber. (Genencor, now part of DuPont, showed us a bug-inspired isoprene Goodrich puts into tires.)
The company is also tweaking the process so it can move from batch to continuous manufacturing. “It is like a salad dressing. You pull oil off of the top” of the fermenter tank, she said.
The activity underscores what one could call the rebirth of biofuels. Biofuel and biochem companies raked in hundreds of millions of dollars in 2006 and 2007. Then the recession hit, causing funding and oil prices to collapse. Companies such as Range Fuels, Imperium Renewables and Mascoma suddenly found themselves facing reduced circumstances. 'Hey, buddy, can you spare $256 million?' became a common refrain.
Amyris wasn't immune from hubris and disappointment. CEO John Melo told us in 2008 that by 2010 Amyris hoped to be producing 200 million gallons of diesel a year and selling it for $2 a gallon at wholesale.
Cut to 2010. Fuel prices started to climb, governments got serious about mileage and biofuel standards, and funding returned, giving startups a chance to meet downward-revised goals. Amyris and Gevo held successful IPOs and Solazyme and Kior are expected soon to follow.
Amyris' progress over the next several years -- assuming it happens -- could also become an endorsement for synthetic biology. Many believe that chemistry and refining can be made cheaper by exploiting engineered microbes and the magic of metabolism. Others say traditional thermochemical processes work better, particularly for volume manufacturing. If Amyris' yeast turn out to be the diligent employees the company has promised, expect to see momentum to start to shift to the bugs.
Fuel is still part of the business plan, she added, but Amyris will move gradually into it. The company largely wants to stick to markets that will allow it to sell its liquids as a positive margin. It’s still not as cheap to ferment oil as it is to extract it out of Saudi Arabia. In some markets with strict renewable standards such as Brazil, Amyris can already find willing fuel customers. A Sao Paolo bus agency is currently buying fuel, for instance.
Over time, Amyris and partners like Shell and Total will try to bring microbe fuel to Europe.
And contrary to some rumors, Amyris remains in the medical market. Sanof-Aventis, the French pharma giant, still plans on coming out with the synthetic version of Artemisinin, a malarial, in late 2011 or early 2012.
COMMENTARY: I have been covering Amyris ever since they announced their next generation biofuels technology for producing hydrocarbons from sugar cane, and they obtained a Department of Energy grant for $24 million on June 2, 2010 and their lackluster IPO of September 28, 2010 that raised only $85 million, stead of the projected $100 million.
According to Amyris' forecasts as of February 28, 2011 (below), the company will not achieve profitability until 2013, when it hopes to generate $800 million plus in revenues and a net profit of about $30 million. Profits are difficult to comeby in biofuels production because it takes a while to ramp up production to achieve economies of scale. Those yeast molecules can only produce so much Biofene hydrocarbons per year, meaning that Amyris will have to probably make additional investments in plant and equipment to its Brazil production facility.
Amyris stock began the year 2011 at $27.o0 per share, peaked at $33.50 in mid-January and closed at $26.43 on April 29, 2011 share. It's stock price reflects the uncertainty and volatilty in energy stocks caused by the turmoil in the Middle East and the Fukushima, Japan nuclear reactor catastophe caused by tsunami created by the 9.1 earthquake in Japan on March 12, 2011.
Amyris' first industrial-scale facility for the production of Biofene™, Amyris’s renewable farnesene, is located in Piracicaba, São Paulo, Brazil at a facility owned by Biomin do Brasil Nutricão Animal Ltda., a company focusing on animal nutrition. Amyris will operate the production facility and expects to begin Biofene production in May. To produce Biofene, Amyris feeds sugar cane syrup into three dedicated 200,000 liter fermentors containing Amyris proprietary yeast. The yeast digest the syrup feedstock and produce farnesene, which is then separated and purified. Biofene may then be sold directly into industrial applications or put through simple chemical finishing steps to form a broad range of renewable products including squalane, base oil and finished lubricants and diesel.
To achieve production at full industrial scale, Amyris has developed an integrated scale-up process which connects ongoing advances in Amyris research with industrial-scale production. By miniaturizing process conditions found in production-scale fermentors, Amyris has been able to translate yeast performance successfully from discovery to production. Amyris further controls scale-up by testing performance in its pilot plant in Emeryville, Calif., followed by vetting in a second pilot plant and a demonstration facility in Amyris’s operations in Campinas, Brazil. Earlier this year, Amyris tested its yeast strains and process in several runs at 100,000 and 200,000 liter scale and generated results that were consistent with previous runs at smaller scale.
Says Amyris CEO John Melo,
“The completion of our first Biofene production facility is a landmark not only for Amyris but also for the renewable products sector. With this milestone, we are demonstrating that engineered yeast may be used to produce high-value hydrocarbon molecules on a commercial scale. This achievement reinforces our goal of providing No Compromise® renewable alternatives to petroleum to transform the chemicals industry, extend the world’s fuel supply and contribute to the betterment of our environment.”
Amyris is scaling its production through contract agreements with manufacturers located in Brazil, Europe and the United States, and has five production agreements in place including contract agreements with Antibioticós S.A., Biomin, Paraíso Bioenergia S.A., Tate & Lyle Ingredients Americas, Inc., an affiliate of Tate & Lyle PLC, and a joint venture with Usina São Martinho S.A., one of the largest sugar and ethanol producers in Brazil. Amyris has also established finishing capabilities with Glycotech, Inc.
Amyris is a great example of how difficult it is to get to scale so that biofuels production produces a profit. I have never been an apostle of biofuels because they require a lot of capital investment in plant and equipment and R&D, producing biobuels takes time, and the quantities of biofuels are very small compared to regular fossil fuels. Whether Amyris can meet its revenue projections remains to be seen, but I see nothing but up for the company given the rising cost of oil and uncertainties in the availability of oil as the global economies improve.
Courtesy of an article dated April 29, 2011 appearing in GreenTechMedia