AECI’s partners to pioneer US-based bio-based PET plant in 2018

26th July 2017

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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Specialty chemicals group AECI’s R65-million investment into US-based startup Origin Materials is expected to position the JSE-listed group as the preferred industrialisation and applications development partner, with access to Africa, in the renewable chemicals space.

The investment was the outcome of a series of projects initiated in 2016 to identify potential new products and markets that could contribute to the acceleration of its growth.

Following the July injection, AECI CEO Mark Dytor said Origin had entered the commercialisation phase of its propriety technology, with the pioneering of a production plant to eventually produce 100% bio-based polyethylene terephthalate (PET) plastic bottles. The plant is now expected to be completed by the end of 2018.

Construction on the plant has started in Sacramento, California, in conjunction with invested global partners Nestlé and Danone.

In March, Danone and Nestlé had joined hands with Origin to develop and launch, at commercial scale, the proposed PET plastic bottle made from bio-based material using 100% sustainable and renewable resources.

The parties are initially targeting a 65% bio-based content, gradually scaling up to 75% bio-based PET plastic bottles by 2020, 95% in 2022 and working up towards a 100% renewable and recyclable PET bottle at a commercial scale, making use of biomass feedstocks, such as used cardboard, sawdust and woodchips, besides others.

Origin Materials has already produced samples of 80% bio-based PET in its pilot plant in Sacramento.

According to previous statements issued by Danone and Nestle, the initial volume targeted is some 5 000 metric tons of bio-based PET to the market.

AECI would assist Origin and its alliance partners in developing and industrialising the process for producing the bio-based PET plastic bottles, the first of which should reach the market as early as 2020, said Dytor at a presentation of the company’s half-year financial results on Wednesday.

“The investment positions AECI to take advantage of the global shift towards renewable products and to benefit from opportunities in the renewable and bio-based chemicals industries,” he added.

FINANCIAL RESULTS
JSE-listed AECI showed overall resilience in a difficult environment as it delivered a double-digit rise in earnings for the first half of this year.

During the six months to June 30, the explosives and specialty chemicals group posted a 32% increase in headline earnings a share to 386c, with profit from operations up 19% to R677-million.

This followed the weighing down of the settlement cost of AECI’s post-retirement medical aid liability in the prior corresponding period’s results.
An interim cash dividend of 138c a share was declared for the six months under review.

“AECI delivered a resilient overall performance in an environment that was extremely difficult, particularly in South Africa. Activity in the local manufacturing sector slowed further and the strength of the rand exchange rate against major currencies offset moderate increases in commodity chemical prices,” the company said in an update to shareholders on Wednesday.

This had a negative impact on the group’s overall revenue, which declined 7% to R8.47-billion.

“AEL Mining Services achieved an excellent improvement of 19% in profit from operations, which increased to R262-million,” AECI noted, adding that this improvement was despite lower ammonia prices and a stronger rand dollar exchange rate year-on-year, which affected revenue and the trading margin.

The segment’s revenue was 11.6% lower at R3.67-billion.

AECI’s specialty chemicals unit reported a 1.5% decline in revenue to R4.9-billion, while profit from operations reduced to R518-million in the first half of the year under review, from R573-million in the first half of 2016.

During the six months to June 30, the property segment’s revenue dropped marginally to R188-million and profit from operations was R43-million, slightly lower than the prior corresponding period’s R44-million.

Edited by Creamer Media Reporter

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