bioplastics what’s really going on in the market ?
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Bioplastics what’s really going on in the market ?. NatureWorks & Ingeo “rethink what you think you know …”. Steve Davies June 20, 2014 NatureWorks LLC www.natureworksllc.com. “rethink what you think you know …”. a bout the industry a bout feedstocks - PowerPoint PPT PresentationTRANSCRIPT
1 © 2014 NatureWorksnaturally advanced materials
Bioplastics
what’s really going on in the market ?
2
Steve DaviesJune 20, 2014
NatureWorks LLCwww.natureworksllc.com
NatureWorks & Ingeo
“rethink what you think you know …”
3 © 2014 NatureWorksnaturally advanced materials
“rethink what you think you know …”
• about the industry• about feedstocks• about capacity and expansion plans• about cost• about performance• about applications• about ….
4 © 2014 NatureWorksnaturally advanced materials
Who we are• World’s first and largest
bioplastics producer
• Global customer base and product adaption
• Proprietary portfolio of Ingeo bio-polymers & intermediates
• Peer reviewed, strong eco-profile
• Ingeo applications breadth across markets, geographies, and retail applications
• World-scale plastics facility
• 2002 Winner - Presidential Green Chemistry Challenge
5 © 2014 NatureWorksnaturally advanced materials
Three Era’s of Bioplastics
• Biobased = exception• Litter focused
• Carbon footprintfocus
• Biobased = expectation• Performance is king• “biodegradable” where
it’s the highest good
“Bioplasticsare for
Biodegrading”
“Bioplastics=
Plastics”
“Bioplastics sequesterCarbon”
2000’s 2010’s1990’s
Forming Storming Norming & Performing
6
Rethink what you think:
about feedstocks …
7 © 2014 NatureWorksnaturally advanced materials
Resins
Additives (Modifiers)
Adhesives
Coatings
Printing Toners
Specialty Lactates
Surfactants
Intermediates
CO2 CO2
CO2 CO2CO2
NatureWorks is in the business of turning greenhouse gases into performance products
8 © 2014 NatureWorksnaturally advanced materials
Resins
Additives (Modifiers)
Adhesives
Coatings
Printing Toners
Specialty Lactates
Surfactants
Intermediates
CO2 CO2
CO2 CO2CO2
NatureWorks is in the business of turning greenhouse gases into performance products
Plant
Sugars
Plants Manufacture
1st Generation
Ag feedstocks are a short
termBridging Tool
CO2 + H2O
9 © 2014 NatureWorksnaturally advanced materials
Q-2, 2013
• NatureWorks Nebraska facility expansion
• From 140,000 to 150,000 ton/year nameplate capacity
We are committed to feedstock diversification:
Investment in innovation and R&D collaboration to grow our Ingeo feedstock portfolio.
Where we are todayDextrose from corn starch
“Bridging Crop”
GENERATION I: 1st step
Performance materials made by transforming whatever are the right, abundant, local resources
10 © 2014 NatureWorksnaturally advanced materials
We are committed to feedstock diversification:
Investment in innovation and R&D collaboration to grow our Ingeo feedstock portfolio.
Where we are todayDextrose from corn starch
“Bridging Crops”
GENERATION I: 1st step
Where we are going nowSucrose from locally
abundant materials such assugar cane
GENERATION I: 2nd step
Performance materials made by transforming whatever are the right, abundant, local resources
NatureWorks Awards Contract for Front End Engineering of Its New Ingeo™ Production Facility
MINNETONKA, Minn., Sept 24, 2013
“NatureWorks announced today that Jacobs (NYSE:JEC) Engineering Group has been awarded the engineering design contract for the company’s next world-scale Ingeo™ production plant in Southeast Asia …”
11 © 2014 NatureWorksnaturally advanced materials
We are committed to feedstock diversification:
Investment in innovation and R&D collaboration to grow our Ingeo feedstock portfolio.
Where we are todayDextrose from corn starch
“Bridging Crops”
GENERATION I: 1st step
And next?CO2 to lactic acid
technology?
CH4 to lactic acid technology?
GENERATION NEXT
Next 3-5 yearsLignocellulosics: Sugars
from bagasse, wood chips, switch grass or straw.
GENERATION II
Where we are going nowSucrose from locally
abundant materials such assugar cane
GENERATION I: 2nd step
Performance materials made by transforming whatever are the right, abundant, local resources
12 © 2014 NatureWorksnaturally advanced materials
And next?CO2 to lactic acid
technology?
CH4 to lactic acid technology?
GENERATION NEXT
We are committed to feedstock diversification:
Investment in innovation and R&D collaboration to grow our Ingeo feedstock portfolio.
Performance materials made by transforming whatever are the right, abundant, local resources
Q2-2013 Long Term R&D Partnership Established
…
13 © 2014 NatureWorksnaturally advanced materials
From Methane to Ingeo
1 2
Methane is supplied directly to specialized bacteria called methanotrophs
NatureWorks converts lactic acid monomers to long polymer chains making a family of Ingeo bioplastics
3
Methanotrophs convert methane into lactic acid through fermentation
It starts with Methane
14 © 2014 NatureWorksnaturally advanced materials
2 - 3 December 2014, Haus der Technik, Essen, Germany
Industry Wide Engagement
15 © 2014 NatureWorksnaturally advanced materials
Certification Tools for Ingeo Biopolymers
1 BIOBASED CARBON CERTIFICATIONVerifies that 100% of carbon in Ingeo comes from renewable ag resources via USDA BioPreferred in the US & Vincotte in Europe.
2 GENESCAN CERTIFICATIONIngeo is certified to be free of any genetic material by Eurofins Genescan.
3
4
5 ISCC PLUS & FEEDSTOCK SOURCINGA combination of NatureWorks’ Feedstock Sourcing Certification and the ISCC PLUS program.
6 WORKING LANDSCAPE CERTIFICATES3rd party (IATP) certifies both sustainable agricultural production and the use of a non-genetically modified crop.
ISCC PLUS3rd party (ISCC) certifies the sustainable production of renewable raw materials including chain of custody.
FEEDSTOCK SOURCING CERTIFICATIONNon-GM corn volume equivalent to a customer’s needs is purchased by NatureWorks and added to the stream entering the corn wet mill.
16 © 2014 NatureWorksnaturally advanced materials
We are committed to feedstock diversification:
Investment in innovation and R&D collaboration to grow our Ingeo feedstock portfolio.
Where we are todayDextrose from corn starch
“Bridging Crops”
GENERATION I: 1st step
And next?CO2 to lactic acid
technology?
CH4 to lactic acid technology?
GENERATION NEXT
Next 3-5 yearsLignocellulosics: Sugars
from bagasse, wood chips, switch grass or straw.
GENERATION II
Where we are going nowSucrose from locally
abundant materials such assugar cane
GENERATION I: 2nd step
Performance materials made by transforming whatever are the right, abundant, local resources
17 © 2014 NatureWorksnaturally advanced materials
What can you get from one bushel (56 lb) of corn?1.6 Pounds of Corn Oil
Cooking Oil, Margarine, Mayonnaise, Salad Dressing, Shortening, Soups, Printing Ink,
Soap, Leather Tanning
AND
32 Pounds of StarchAdhesives, Batteries, Cardboard, Crayons, Degradable Plastics, Dyes, Plywood, Paper,
Antibiotics, Chewing Gun
AND OR
13.5 Pounds of Gluten Feed21% Protein
Livestock & Poultry Feed, Pet Food
33 Pounds of SweetenerShoe Polish, Soft Drinks & Juices, Jams and Jellies,
Canned Fruit, Cereal, Licorice, Peanut Butter, Catsup, Marshmallows
AND OR
2.6 Pounds of Gluten Meal60% Protein
Amino Acids, Fur Cleaner, Poultry Feed
2.7 Gallons of Ethanol/AlcoholMotor Fuel Additive, Alcoholic Beverages, Industrial
AlcoholOR
22.4 Pounds of Ingeo™ Biopolymer
The US uses one billion lbs of starch in corrugated paper every year. Source: National Corn Growers Association's 2008 World of Corn Report
“It’s not Food Or Bioplastic”
“It’s Food And Bioplastic”
Food sources corn oil, and animal feed products such as gluten feed, and gluten meal co-exist with the starch end uses, regardless of whether or not that starch is used to
make materials like Ingeo.
18
Rethink what you think:about price, product, and market
applications …
19 © 2014 NatureWorksnaturally advanced materials
Properties
• Broad and adjustable physical property set
Price
Sugars vs oil
Favorable yields,
Economies of scale
Feedstock hedging capabilities
Cradle to cradle economics
Preferences
Lower carbon footprint and energy usage
Renewable feedstock
Health Concerns BPA free Phthalates free Acrylonitrile free
What it’s all about
“The 3 P’s”
20 © 2014 NatureWorksnaturally advanced materials
comparative cost stability
Jan-1
0
Mar-10
May-10
Jul-1
0
Sep-10
Nov-10
Jan-1
1
Mar-11
May-11
Jul-1
1
Sep-11
Nov-11
Jan-1
2
Mar-12
May-12
Jul-1
2
Sep-12
Nov-12
Jan-1
3
Mar-13
May-13
Jul-1
3
Sep-13
Nov-13
Jan-1
4
Mar-14
May-14
Jul-1
4
Sep-14
Nov-14
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60 PET PP PS
USD
/lb
Source: IHS 02/14 North America C-M prices
21 © 2014 NatureWorksnaturally advanced materials
The shale gas boom means energy companies in the United States are boosting their capacity to turn cheap gas into ethylene, a basic hydrocarbon used to make solvents, plastics and detergents….
More complex hydrocarbons derived from crude oil, however, are becoming more expensive and their supply more volatile, adding urgency to a drive by specialty chemical companies to make everyday materials such as synthetic rubber, insulation foam and diaper absorbents from plant matter….
But more than half of what naphtha crackers churn out is ethylene. When the product is made more cheaply elsewhere, cracking naphtha becomes a less profitable business…. .
This environment is likely also to be supportive of renewable chemistry economics," they added.”
Ludwig Burger, Reuters, FRANKFURT | Fri Dec 7, 2012
“Cheap shale gas gives impetus to bioplastics growthMakers of chemicals and plastics from plant matter are emerging as unlikely
beneficiaries of the abundance of U.S. shale gas, which is shaking up the global petrochemical industry.
22 © 2014 NatureWorksnaturally advanced materials
$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60$0
$50
$100
$150
$200
$250
Cost of sugar (c/lb)
Cost
of O
il ($
/bbl
)PET/PS/Ingeo Feedstock Cost Comparison
Above lines, Ingeo wins
Below lines, PET/PS wins
PET
PS
MaterialIndifference Curve
PET Analysis from McKinsey margin models, CMAI, February 2006
23 © 2014 NatureWorksnaturally advanced materials
$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60$0
$50
$100
$150
$200
$250
Cost of sugar (c/lb)
Cost
of O
il ($
/bbl
)PET/PS/Ingeo Feedstock Cost Comparison
Above lines, Ingeo wins
Below lines, PS wins
PS
For Example• When sugar cost ~$.17/lb, the cost
of feedstock per lb of Ingeo is the same as the cost of feedstock per lb of PS when oil is ~$50/barrel
• OPEX and CAPEX are similar.• The rest is scale…
Cellulosic sugarsGen 3 sugars PET Analysis from McKinsey margin models, CMAI, February 2006
24 © 2014 NatureWorksnaturally advanced materials
Clarifying Sugar to Polymer Yields
Polymer Technology Overall Process Yield
Kg sugar for 1 kg polymer
Bio PLA (Ingeo) Sugar to PLA via lactic acid and lactides
80% 1.25
Bio PP Sugar to ethanol to propylene to PP
47% 2.14
Bio PET Bio MEG + Bio PTA from sugar
36% 2.77
Bio PE Sugar to ethanol to ethylene to PE
31% 3.22
25
Rethink what you think:
about properties & performance …
26 © 2014 NatureWorksnaturally advanced materials
Food Serviceware
Nonwovens / Fibers
Rigids Films
Durables
Where we are in the Market
Lactides Bus. Dev.
27 © 2014 NatureWorksnaturally advanced materials
Ingeo Technology Platforms
8-seriesFoam
7-seriesBlow Molding
6-seriesFibers/Non-woven
4-seriesFilm
3-seriesInjection Molding
2-seriesThermoforming
Lactide Monomer
28 © 2014 NatureWorksnaturally advanced materials
Food ServicewareNonwovens / Fibers Rigids FilmsDurables
Key Properties Range of melting
points/crystallinity levels
Tunable hydrolysis Hydrophilic / moisture
wicking Inherent odor
resistance UV resistance Low bonding temp
Key Properties Stiffness Gloss, transparency Printability Weight reduction (vs.
PET)
Key Properties Stiffness Miscibility Improved flow Chemical resistance
Key Properties Stiffness Compostability High versatility for
injection, extrusion and coating processes
Key Properties Stiffness High gloss and
transparency Dead fold / twist
retention Grease, oil and aroma
barriers Chemical resistance High throughput
Performance features depend on application
29 © 2014 NatureWorksnaturally advanced materials
2012 Design Table – 15 Distinct Ingeo Grades
2500HP 1grade
3grades
2grades
3100HP6100D
3grades
3grades
1grade
3260HP6260D
2grades
Incr
easi
ng M
olec
ular
Wei
ght
Fiber and Injection Molding Grades
Extrusion Grades
Varying Lactic Acid co-monomer ratio
30 © 2014 NatureWorksnaturally advanced materials
2013 Expanded Design Table – 21 Ingeo Grades
1grade
1grade
3grades
2grades
2grades
3grades
3grades
1grade
2grades
2grades
1grade
Incr
easi
ng M
olec
ular
Wei
ght
Fiber and Injection Molding Grades
Extrusion Grades
Varying Lactic Acid co-monomer ratio
31 © 2014 NatureWorksnaturally advanced materials
Improved Stiffness for Heat Resistant Ingeo Parts
60 70 80 90 100 110 1200
20
40
60
80
100
Improved Stiffness with Crystalline Ingeo for Practical Temperature Range of Hot
Foods
Temperature, °C
Mod
ulus
(M
pa)
~40% increase in stiffness
Incumbent Grade
High Productiv-ity
Grade
32 © 2014 NatureWorksnaturally advanced materials
With related reduction in the manufacturing time required to produce the heat resistance part …
Existing Ingeo Grades
Temperature
New High Productivity Ingeo Grades:~ 70% shorter cycle times
Decrea
sing
Cycle
Time
33
Rethink what you think:
about applications & markets …
34 © 2014 NatureWorksnaturally advanced materials
Properties
• Broad and adjustable physical property set
Price
Sugars vs oil
Favorable yields,
Economies of scale
Feedstock hedging capabilities
Cradle to cradle economics
Preferences
Lower carbon footprint and energy usage
Renewable feedstock
Health Concerns BPA free Phthalates free Acrylonitrile free
What it’s all about
“The 3 P’s”
35 © 2014 NatureWorksnaturally advanced materials
Innovation in Form-Fill-Seal Packaging
36 © 2014 NatureWorksnaturally advanced materials
• Carbon savings• 75% reduction in CO2 emissions• Equivalent to 1,320 MT CO2/year savings
• Ingeo out performs polystyrene• Stronger/less breakage• Better lid adherence• Lower temperature filling (less energy use)• Maintained line speed and shelf life
• Addresses consumer concerns• Well received by key opinion leaders• Reduction in human toxicity• Did NOT increase our retail price
Danone’s Stonyfield - in their own words:“IMPACT OF INGEO CONVERSION”
Stonyfield CEO Gary_Hirschberg, Innovation Takes Root Conference Keynote:“Inventing a WIN- WIN- WIN- WIN- WIN FUTURE”, February 21, 2012
Environmental
Performance
Consumer& Cost
37 © 2014 NatureWorksnaturally advanced materials
3D Printing
38 © 2014 NatureWorksnaturally advanced materials
0
20
40
60
High impactPMMA
ImpactPMMA
10%PLA
ImpactPMMA
20%PLA
ImpactPMMA
40%PLA
ImpactPMMA
60%PLA
PETG PC
Impa
ct s
treng
th (J
)-
Acrylic
--------------- Acrylic / Ingeo Alloys ----------- PETGPC
Improving Plexiglas PMMA Impact Performance with Ingeo
Source: Altuglas International a subsidiary of Arkema International
Impact performance comparable to PETG and PC
39 © 2014 NatureWorksnaturally advanced materials
In Food Service, Ingeo provides a tool for organics diversion
40 © 2014 NatureWorksnaturally advanced materials
41 © 2014 NatureWorksnaturally advanced materials
42 © 2014 NatureWorksnaturally advanced materials
Ingeo Sunshades
www.revolution-fabrics.com/index_en.html
43
Rethink what you think:
About market presence
44 © 2014 NatureWorksnaturally advanced materials
2005
2006
2007
2008
2009
2010
2011
2012
2013
6 X
Market Presence
Sales CAGR: 24%
2005 – 2013 Footprint in the market
aggregate volume in the market
as of 2013
1 Billion lbMilestone
45 © 2014 NatureWorksnaturally advanced materials
Market Presence
2005
2006
2007
2008
2009
2010
2011
2012
2013
6 X
2005 – 2013 Footprint in the market
aggregate volume in the market
as of 2013
1 Billion lbMilestoneTechnology & Intellectual
Property Established
Startup & Market
Seeding
Operations Established
Today
1990-2001 2002-2005 2006-2013 2014 - forward
Sales CAGR: 24%
Milesto
nes 4k -8k mt
pilot plant2002 -140k mt facility @ Blair.2003 -largest lactic acid plant
Expanding customer & product base.Plant 2
2006 - 24/7 Blair operations at Blair 2013 – 150k ton expansion
Poised for Strong Growth
Market Presence – in the bigger picture
Sales CAGR: 24%
46
Rethink what you think:
About end-of-life …
47 © 2014 NatureWorksnaturally advanced materials
Global-scale adoption: Where are we geographically
48 © 2014 NatureWorksnaturally advanced materials
Global-scale adoption: Where are we geographically
“What is the right end-of-life”
49 © 2014 NatureWorksnaturally advanced materials
Global-scale adoption: Where are we geographically
With this breadth or products & Geographies - for us, it’s about being cognizant of all
relevant end-of-life opportunities, for all
applications, in all geographies we sell into . . .
50
How we look at things . . .
51 © 2014 NatureWorksnaturally advanced materials
“Technical nutrients” • basically inorganic or
synthetic materials manufactured by humans—such as plastics and metals--that can be used many times over without any loss in quality, staying in a continuous cycle.
“Biological nutrients”• Biological nutrients and
materials are organic materials that can decompose into the natural environment, soil, water, etc. without affecting it in a negative way, providing food for bacteria and microbiological life
Ingeo recycle Ingeo composting
Source: Cradle to Cradle: Remaking the Way We Make Things by William McDonough & Michael Braungart
“Nature doesn’t have a design problem, people do”
William McDonough and Michael Braungart, 2002
Ingeo From A Cradle-to-Cradle Perspective
52 © 2014 NatureWorksnaturally advanced materials
IngeoCradle
toCradle
Options
MechanicalRecycle FeedstockRecovery Compost AnaerobicDigestion EnergyRecovery Landfill X X
Incumbent Plastics Ingeo
53 © 2014 NatureWorksnaturally advanced materials
Ingeo: Myths, Realities and Misperceptions
• “Since PLA is a compostable resin, all items made from Ingeo are compostable and should be composted at the end of life”
Not Necessarily
• Compostability makes sense for diverting food and agricultural material. If the product doesn’t do that then composting isn’t the best end of life
option.
YES NO
54 © 2014 NatureWorksnaturally advanced materials
Incumbent Plastics Ingeo
MechanicalRecycle FeedstockRecovery Compost AnaerobicDigestion EnergyRecovery Landfill X X
RecycleOptions
55 © 2014 NatureWorksnaturally advanced materials
Recycling Post Consumer Ingeo
Collecting Converting End Markets
56 © 2014 NatureWorksnaturally advanced materials
In a nutshell - NatureWorks approach
Develop Business by:• Selling Ingeo grades into
consumer products where the potential for recycle stream contamination is minimal
• Targeting products which today, have little or no recycle yet occurring
• Achieving scale “safely”
57 © 2014 NatureWorksnaturally advanced materials
In a nutshell - NatureWorks approach
Develop Business by:• Selling Ingeo grades into
consumer products where the potential for recycle stream contamination is minimal
• Targeting products which today, have little or no recycle yet occurring
• Achieving scale “safely”
Implications . . .
• Constrained sales intocertain applications &geographies
58 © 2014 NatureWorksnaturally advanced materials
In a nutshell - NatureWorks approach
Develop Business by:• Selling Ingeo grades into
consumer products where the potential for recycle stream contamination is minimal
• Targeting products which today, have little or no recycle yet occurring
• Achieving scale “safely”
All the while simultaneously1. Developing end markets
2. Characterizing Ingeo presence in recyling system today– where is it, (which streams), – how much is there– what’s the economic potential
3. Working with recyclers to address sortation challenges
59 © 2014 NatureWorksnaturally advanced materials
NatureWorks’ Approach to the Post-ConsumerPLA Collection & Recycling Challenge
• Foodservice Packaging Institute (FPI) – Plastics Recovery Group
• AMERIPEN
• Secondary Processing of Mixed Plastics and MRF Residuals
• Sports Venues
• Concerts/Music Festivals
• Other Events/Venues
•Corporate Campuses
Closed Loop Public Venue Collection Programs
Municipal RecyclingInitiatives
60
Steve DaviesJune 20, 2014
NatureWorks LLCwww.natureworksllc.com
NatureWorks & Ingeo
“rethink what you think you know …”
61
Questions ?
62 © 2014 NatureWorksnaturally advanced materials
Cargill Lactic AcidNatureWorks LLC - Ingeo Plant
640 acres - 1 sq. mile – 263 ha.
Missouri River
Cargill Corn Mill
Cargill Sugar Refinery
Cargill Ethanol
Evonik (lysine)
Cargill Erythritol
Cargill Corn Oil
Purac (lactic acid and lactic salts)
Novozymes
56 lbs Corn $6.00/bushel
1.6 lbs Oil $1.25*13.5 lbs gluten feed $1.00*2.6 lbs gluten meal $0.65*33 lbs starch $0.10 (0.10-0.15/lb)
*Based on WSJ/CBOT prices 2008
63 © 2014 NatureWorksnaturally advanced materials
•Source: 2011 World of Corn report from NCGA
~28%for
ethanol
< 0.11% forIngeo
Corn inNorth America
150,000 ton Ingeo/year ?How do corn
supply & ingeo
demand compare?
Feedstock Generation I
– Our footprint is small: At full capacity, Ingeo represents:• < 0.11% of the starch associated with US corn production (<.04% of global production)• “The corn oil, gluten feed, and gluten meal markets for that 0.11% of US corn remain
unaffected.”