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Planting Strategic Returns
BY ELIZA LEUNG
A brand new factory in South-East Asia. A Food Ingredients Europe nomination. Investments into lactides—a building block for bioplastic/PLA production. Purac’s Haiko Zuidhoff discusses the harvest of a productive year.
1 November 2007
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For Purac, nothing silences competitive chatter like the superlative 'biggest'. This year, the producer of lactic acid and lactates built the world’s largest lactic-acid factory in coastal Rayong. The new Thai plant is expected to put a dent in worldwide demand; while sharply turning the directional pull of the company’s global supply chain. By ceasing some operations in Spain and the Netherlands, Purac will limit lactic acid production to Brazil, the US, and now Thailand. With this change in course, the company hopes to soften the blow of soaring commodity and energy prices. At the same time, it aims to free up resources for D(-) and lactide production in Spain, and to meet the global hunger for PLA (Poly Lactic Acid).
AFJ: Tell us about the new facility.
Zuidhoff: It is huge, even by organic-acid standards. Our factory will have a capacity of 100,000 tons. (A citric-acid plant is usually smaller.) This will give us economies of scale; and therefore, cost advantages. This factory has pulled all the best technologies from our plants in America, Brazil, Holland and Spain. It will produce lactic acid, as well as its derivatives—like potassium lactate and sodium lactate. Lead times will be drastically reduced. There is no time zone anymore. So the Asia Pacific consumer will benefit. We will be able to use it to strengthen our market position in China, and to cater to the growth of the Asian market. We see that we are growing annually in double digits. And we expect that to continue. Furthermore, the factory in Thailand will be used for export to Europe. So technology combined with skill and efficiency will make this facility very competitive. We finished our pilot and already started commercial production. By the first of January 2008, we expect to make our first delivery.
AFJ: Why Thailand?
Zuidhoff: The combination of feedstock availability and infrastructure was key. Four years ago, we evaluated all possible AP locations— among others, Singapore, Malaysia, Australia, Vietnam, and of course Thailand. China was an option as well, because at that time it was a net exporter of corn. But we knew it was only a matter of time before it became a net importer. Thailand, on the other hand, is an exporter of starch and a large producer of sugar(cane). This allows us to use two different feedstocks. Our factory is located near Rayong, near the port. And just five meters from it, there is also a lot of sugar cane and tapioca. So all the raw materials we need are there. And that’s quite unique. If we had gone to China, we would have had to choose between being close to a port or the corn belt, which is located in the northern parts. But we wouldn’t have been close to both. Intellectual property and investment incentives obviously also played a critical role in the final choice.
AFJ: Puracal Act was nominated for a FiE award.
Zuidhoff: This is a true innovation that has been several years in the making. It effectively reduces acrylamide by up to 70 percent. (Acrylamide is a suspected carcinogen and is formed in presence of reducing sugars and amino acids, in particular asparagines.) Puracal Act also makes snacks crispier, creating better textures and causing less browning. While there are other acrylamide reducers on the market based on enzymes, we have tackled the problem with a proprietary combination of calcium salts. So this works in a very cost effective way. We solved an industry problem, and at the same time created an opportunity for snack manufacturers. We are selling it as we speak. There has been a great interest—not just from more developed economies like Korea and Australia, but also in places like India. China is also catching up fast, particularly because of the recent food scares and scandals, making adoption of products like Puracal Act easier. What we’re doing here is making sure that snacks are healthier by taking away one important concern about deep-fried products.
AFJ: Tell us about Purac’s new lactides
Zuidhoff: Purac’s new lactides will be sold to companies that use them to make PLA-based bioplastics. PLA has been on the market for years, but only in the last two years have we seen a huge growth in demand. And that demand currently outstrips supplies by far. Drivers for the current strong growth are present in the whole value chain: high oil prices, stricter environmental legislations (in Europe), a strong pull from the retail industry, and consumers with environmental concerns.
PLA production is complex. This is one of the key reasons for the hampering of the market growth; there is as yet no economical and efficient PLA-production technology available. With our lactides, we remove a lot of production hurdles and help potential PLA-producers make bioplastic in a much more cost effective way. Basically Purac bridges the technology gap that currently restricts the plastics industry from accelerating PLA market growth.
We will be producing and selling lactides in both D(-) and L(+) form (stereochemical isomers). With these lactides, compounded PLA polymers can be made which will be suitable for applications as diverse as hot-fill bottles, microwaveable trays, temperature resistant fibers and electronics; and they will be able to withstand temperatures of up to 175 Celsius.
The technology will reduce costs and investments for the bioplastics industry and significantly contribute to the growth of the PLA market. Bio-plastics producers can now produce compounds for a wide variety of new high-end applications.
AFJ: Where is PLA going?
Zuidhoff: We see a lot of plastic processors in Asia in general, exporting their goods to Europe and America. Next to that, there is also a demand in Japan and Korea—similar to that of Europe. And surprisingly, even China. In China, one focus for the Beijing Olympics is to make it a 'green' Olympics. So PLA is playing a pivotal role there.
As of yet, PLA is predominantly being used in food packing, disposable bags, and agricultural films as a replacement of PET and PS among others. It is very transparent and has nice properties for these applications. Eventually, the use of PLA will move to more up-markets. Expect to see it in added-value plastic applications— engineering plastics, fibers and textiles. (It can be used for floor mats, for instance.) That’s one of the reasons we started producing D(-) lactic acid. D(-) lactides are able to greatly improve the properties and performance of PLA. For the higher-engineered plastics, the compound plastics, there are still some drawbacks, like heat resistance. So we developed our D(-) lactide by copolarizing D(-) lactides with our L(+) lactide. We are able to make a PLA that is extremely heat resistant, allowing us to move up the plastic cone, to more types of engineering plastics.
The market is screaming for PLA. And significant capacity won’t be coming up until about the end of 2009, 2010. It takes time to build factories. Right now, there is one commercial PLA supplier at the moment that is practically sold out. So we need more PLA players. Purac’s new lactide techonlogy will be an enabler to basically make the entrance barrier much lower.
AFJ: Tell us about the new facility.
Zuidhoff: It is huge, even by organic-acid standards. Our factory will have a capacity of 100,000 tons. (A citric-acid plant is usually smaller.) This will give us economies of scale; and therefore, cost advantages. This factory has pulled all the best technologies from our plants in America, Brazil, Holland and Spain. It will produce lactic acid, as well as its derivatives—like potassium lactate and sodium lactate. Lead times will be drastically reduced. There is no time zone anymore. So the Asia Pacific consumer will benefit. We will be able to use it to strengthen our market position in China, and to cater to the growth of the Asian market. We see that we are growing annually in double digits. And we expect that to continue. Furthermore, the factory in Thailand will be used for export to Europe. So technology combined with skill and efficiency will make this facility very competitive. We finished our pilot and already started commercial production. By the first of January 2008, we expect to make our first delivery.
AFJ: Why Thailand?
Zuidhoff: The combination of feedstock availability and infrastructure was key. Four years ago, we evaluated all possible AP locations— among others, Singapore, Malaysia, Australia, Vietnam, and of course Thailand. China was an option as well, because at that time it was a net exporter of corn. But we knew it was only a matter of time before it became a net importer. Thailand, on the other hand, is an exporter of starch and a large producer of sugar(cane). This allows us to use two different feedstocks. Our factory is located near Rayong, near the port. And just five meters from it, there is also a lot of sugar cane and tapioca. So all the raw materials we need are there. And that’s quite unique. If we had gone to China, we would have had to choose between being close to a port or the corn belt, which is located in the northern parts. But we wouldn’t have been close to both. Intellectual property and investment incentives obviously also played a critical role in the final choice.
AFJ: Puracal Act was nominated for a FiE award.
Zuidhoff: This is a true innovation that has been several years in the making. It effectively reduces acrylamide by up to 70 percent. (Acrylamide is a suspected carcinogen and is formed in presence of reducing sugars and amino acids, in particular asparagines.) Puracal Act also makes snacks crispier, creating better textures and causing less browning. While there are other acrylamide reducers on the market based on enzymes, we have tackled the problem with a proprietary combination of calcium salts. So this works in a very cost effective way. We solved an industry problem, and at the same time created an opportunity for snack manufacturers. We are selling it as we speak. There has been a great interest—not just from more developed economies like Korea and Australia, but also in places like India. China is also catching up fast, particularly because of the recent food scares and scandals, making adoption of products like Puracal Act easier. What we’re doing here is making sure that snacks are healthier by taking away one important concern about deep-fried products.
AFJ: Tell us about Purac’s new lactides
Zuidhoff: Purac’s new lactides will be sold to companies that use them to make PLA-based bioplastics. PLA has been on the market for years, but only in the last two years have we seen a huge growth in demand. And that demand currently outstrips supplies by far. Drivers for the current strong growth are present in the whole value chain: high oil prices, stricter environmental legislations (in Europe), a strong pull from the retail industry, and consumers with environmental concerns.
PLA production is complex. This is one of the key reasons for the hampering of the market growth; there is as yet no economical and efficient PLA-production technology available. With our lactides, we remove a lot of production hurdles and help potential PLA-producers make bioplastic in a much more cost effective way. Basically Purac bridges the technology gap that currently restricts the plastics industry from accelerating PLA market growth.
We will be producing and selling lactides in both D(-) and L(+) form (stereochemical isomers). With these lactides, compounded PLA polymers can be made which will be suitable for applications as diverse as hot-fill bottles, microwaveable trays, temperature resistant fibers and electronics; and they will be able to withstand temperatures of up to 175 Celsius.
The technology will reduce costs and investments for the bioplastics industry and significantly contribute to the growth of the PLA market. Bio-plastics producers can now produce compounds for a wide variety of new high-end applications.
AFJ: Where is PLA going?
Zuidhoff: We see a lot of plastic processors in Asia in general, exporting their goods to Europe and America. Next to that, there is also a demand in Japan and Korea—similar to that of Europe. And surprisingly, even China. In China, one focus for the Beijing Olympics is to make it a 'green' Olympics. So PLA is playing a pivotal role there.
As of yet, PLA is predominantly being used in food packing, disposable bags, and agricultural films as a replacement of PET and PS among others. It is very transparent and has nice properties for these applications. Eventually, the use of PLA will move to more up-markets. Expect to see it in added-value plastic applications— engineering plastics, fibers and textiles. (It can be used for floor mats, for instance.) That’s one of the reasons we started producing D(-) lactic acid. D(-) lactides are able to greatly improve the properties and performance of PLA. For the higher-engineered plastics, the compound plastics, there are still some drawbacks, like heat resistance. So we developed our D(-) lactide by copolarizing D(-) lactides with our L(+) lactide. We are able to make a PLA that is extremely heat resistant, allowing us to move up the plastic cone, to more types of engineering plastics.
The market is screaming for PLA. And significant capacity won’t be coming up until about the end of 2009, 2010. It takes time to build factories. Right now, there is one commercial PLA supplier at the moment that is practically sold out. So we need more PLA players. Purac’s new lactide techonlogy will be an enabler to basically make the entrance barrier much lower.
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