BioAmber Signs Take-or-Pay Contract For Three Bio-Succinic Acid Plants
Vinmar commitment is for 210,000 tons of succinic acid per year when three plants operational
-- Contract guarantees sale of 10,000 tons per year for 15 years from Sarnia plant in construction -- 50% of Sarnia capacity is under take-or-pay, with total contracted demand exceeding capacity -- Previously announced 100,000 ton per year BDO plant will be expanded to also produce 70,000 tons per year of succinic acid, with Vinmar off-taking 100% of the BDO produced and 70% of the bio-succinic acid produced for 15 years -- Vinmar also commits to off-take 75% of the production from a new, third bio-succinic acid plant with 200,000 MT per year capacity that BioAmber currently plans to startup in 2020 -- Vinmar commits to a 10% or greater equity investment in each of the next two plants
MINNEAPOLIS, MN, July 7, 2014 /CNW Telbec/ – BioAmber Inc. (NYSE: BIOA), an industrial biotechnology company producing sustainable chemicals, today announced it has signed a 210,000 ton per year take-or-pay contract for bio-based succinic acid (“SA”) with Vinmar International. Under the terms of the 15-year master off-take agreement, Vinmar has committed to purchase and BioAmber Sarnia, a joint venture with Mitsui & Co., has committed to sell 10,000 tons of succinic acid per year from the 30,000 ton per year capacity plant that is currently under construction in Sarnia, Canada.
BioAmber and Vinmar also broadened the scope of their previously announced 100,000 ton per year 1,4 butanediol (BDO) plant, which the parties currently plan to start up in late 2017. Under that agreement, following the financing, construction and commissioning of the BDO plant, Vinmar has committed to purchase and BioAmber has committed to sell 100% of the BDO produced for 15 years. As part of the new succinic acid master off-take agreement, this second plant will be expanded to an annual capacity of 100,000 tons of bio-BDO and 70,000 tons of bio-succinic acid. Vinmar plans to make a 10% or greater equity investment in the expanded plant and has committed to off-take and BioAmber has committed to sell a minimum of 50,000 tons per year of bio-succinic acid for 15 years following the plant’s start-up date. Vinmar also has the option to secure additional bio-succinic acid tonnage under the take-or-pay contract if BioAmber has not committed the remaining volume at the time the plant’s financing is secured.
Vinmar also committed to off-take and BioAmber committed to sell a minimum of 150,000 tons per year from a new, third plant following its financing, construction and commissioning. The plant would be dedicated to bio-succinic acid production and would have an annual capacity of 200,000 tons per year. Vinmar plans to invest at least 10% of the equity in this third plant, which BioAmber expects to start up in late 2020, based on the projected development of the succinic acid market.
The Vinmar take-or-pay contract, together with the take-or-pay agreement signed in April 2014 with PTTMCC Biochem (a joint venture between Mitsubishi Chemical and PTT of Thailand), guarantees the sale of 50% of Sarnia plant capacity during the first three years of operation and 33% of plant capacity for the following 12 years. In addition, BioAmber has signed 19 supply and distribution agreements and seven memorandum of understanding to date, and the cumulative volume of these contracts exceeds the available capacity for sale in Sarnia. BioAmber has been selling bio-based succinic acid for over four years and to date 38 customers have qualified the company as a succinic acid supplier and purchased product from the existing production facility in France.
“This multi-plant deal is a quantum leap forward for our succinic acid business and sets a clear path for rapid growth,” said Jean-Francois Huc, BioAmber’s Chief Executive Officer. “Securing off-take for three plants will help us to obtain project financing and accelerate the deployment of our platform. Our partnership with Vinmar gives us the capability to expand our production capacity, gain economies of scale and guarantees the sale of a significant portion of our output,” he added.
“Vinmar is committed to growing the market for bio-based chemicals, which have strong global trends favoring their development,” said Dr. Serge Verma, President of Vinmar Projects. “Our long-term off-take contract with BioAmber reflects the potential we see for succinic acid as a platform chemical that will substitute adipic acid and other petro-derived building blocks. We believe BioAmber’s technology will effectively compete with these chemicals, allowing us to market bio-based succinic acid into the merchant market at competitive prices.” he added.
Vinmar International is a leading marketer and distributor of chemicals with sales of over $4 billion per year and annual volumes that exceed 3 million tons. With over 450 staff in 30 countries, Vinmar possesses the global presence, existing customer relationships, back office infrastructure and logistics capabilities needed to cost effectively penetrate the growing merchant market for succinic acid. This in turn will allow BioAmber’s commercial team to focus on key accounts that require value added support and services, seek derivatives of succinic acid or engage in joint development.
BioAmber (NYSE and EURONEXT Paris: BIOA) is an industrial biotechnology company producing sustainable chemicals. Its proprietary technology platform combines industrial biotechnology and chemical catalysis to convert renewable feedstock into sustainable chemicals for use in a wide variety of everyday products including plastics, resins, food additives and personal care products. For more information visit www.bio-amber.com
Vinmar International Ltd is a privately held marketing, distribution and project development company headquartered in Houston, Texas. Over the past 35 years Vinmar has grown to over 450 employees in 30 countries, with sales in excess of 3 million metric tons consisting of petrochemicals, polymers and elastomers, and generating revenues of over US$4 Billion in 2012. The Houston Chronicle ranked Vinmar the third largest privately held company by revenue in its 2013 annual rankings for the Greater Houston region. Vinmar is part of the Goradia Group of Companies that also includes Goradia Capital, which acquires and operates chemical manufacturing plants and has participation in grass-roots petrochemical projects.
This press release contains forward-looking statements, including statements related to the timing of the completion of our planned facility in Sarnia, Ontario, the planned construction of a BDO and succinic acid production facility in North America, the planned construction of a subsequent succinic acid plant, the funding sources for the construction and operation of these facilities, the equity ownership of these facilities, the purchase by Vinmar of the Company’s bio-based succinic acid and bio-based BDO, and the sale of succinic acid produced in Sarnia to various customers under contract. All statements other than statements of historical fact contained in this press release are forward-looking statements. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “seek,” “will,” “may” or similar expressions. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond BioAmber’s control. BioAmber’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in BioAmber’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2014 filed with the Securities and Exchange Commission, as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the expected funding sources of our planned Sarnia, Ontario plant and our other planned manufacturing facilities and the expected timing of the completion of construction and the start of commercial operations at each of these facilities; our joint venture with Mitsui & Co. Ltd.; our take-or-pay agreements with Vinmar International Ltd., or Vinmar, related to bio-based 1, 4 BDO and bio-based succinic acid; our take-or-pay agreement with PTT MCC Biochem Company Limited, or PTTMCC, related to bio-succinic acid from our planned Sarnia, Ontario plant; the expected applications of our products and the sizes of addressable markets; our ability to gain market acceptance for bio-succinic acid, its derivatives and other building block chemicals; the benefits of our transition from our E. coli bacteria to our yeast; our ability to commence commercial sales and execute on our commercial expansion plan, including the timing and volume of our future production and sales; the expected cost-competitiveness and relative performance attributes of our bio-succinic acid and the products derived from it; our ability to cost-effectively produce and commercialize bio-succinic acid, its derivatives and other building block chemicals; customer qualification, approval and acceptance of our products; our ability to maintain and advance strategic partnerships and collaborations and the expected benefits and accessible markets related to those partnerships and collaborations; the impact of the recent off-take agreements on the Company’s business with its customers, including its distributors, and with its current and future equity partners; our ability to economically obtain feedstock and other inputs; the achievement of advances in our technology platform; our ability to obtain and maintain intellectual property protection for our products and processes and not infringe on others’ rights; government regulatory and industry certification approvals for our facilities and products; government policy making and incentives relating to bio-chemicals. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the events and circumstances reflected in the forward-looking statements will be achieved or occur and the timing of events and circumstances and actual results could differ materially from those projected in the forward-looking statements. Accordingly, you should not place undue reliance on these forward-looking statements. All such statements speak only as of the date made, and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE BioAmber Inc.