Metabolix Pulls Plug On Plant, Scales Back to Conserve Cash

Bioplastics development continues to sputter as the economics for volume applications weaken.

In early November of last year, executives of bioplastics developer Metabolix said: “We remain on-track to have biopolymer production up and running in late 2015.” A month later, the company issued a press release stating that it “has decided to defer making a commitment to contract manufacturing at the site at this time.” A plant with a capacity of 2,500 to 5,000 tons per year of capacity had been envisioned.

The development is a big deal because Metabolix was one of the early high-fliers in bioplastics. The Massachusetts-based company had joined with Archer Daniels Midland in 2006 to form Telles to mass produce a bioplastic called PHA at a 50,000 tons-per-year plant in Clinton, Iowa. Despite the material’s relatively high cost, there was optimism that American retail giants would be eager to convert to packaging made from renewable resources, in this case corn. But the market did not develop, and ADM pulled the plug on Telles, taking a write-off in excess of $300 million.

Metabolix satisfied orders with inventory from the Telles JV and production from pilot manufacturing facilities, saying that it was looking for a more long-term, larger production site. It’s not clear why that plan crashed so quickly toward the end of last year. Surely the reduced price of oil was a factor in the demand for PHAs. Likely the company’s cash burn rate was also an important factor.

Instead, Metabolix said that it plans to significantly increase output of its Mirel PHA biopolymers at currently used contracted pilot manufacturing facilities. Initial focus will be on production of a-PHA (amorphous, low Tg rubber) biopolymer for use in development projects.

“We believe this is the right approach to biopolymer manufacturing at this time,” said Joseph Shaulson, president and CEO of Metabolix. “We expect the increased output from our pilot facilities will require only a modest level of capital investment in 2015, which extends the runway provided by the financing and restructuring we completed earlier this year (2014) as compared to the intermediate scale option we have been evaluating.”

Metabolix continues to scale back to survive.

German operations were sold to compounder AKRO-PLASTICS at a loss of $900,000. The German business (consisting of compounded resins for compostable film and bag applications) represented an important chunk of the company’s revenue, but it was not profitable.

Metabolix took a restructuring charge of $700,000 late last year to cover post-employment benefits for staff affected by cutbacks. Efforts are under way to spin off its program to coproduce plastics in crops. Chemicals development (such as bioacryclic) has been suspended.

The focus going forward will be on PHAs used as performance additives, where the price per pound is often in the $3 to $5 range. Products featured in the company’s exhibit at NPE2015 next month in Orlando, Florida shows its view of the forseeable future: polymeric modifiers for PLA, processing aids and additives for PVC, barrier coatings for paper and cardboard, and marine biodegradable micropowders.

 

 

 

 

 

About Doug Smock

Former Chief Editor at Plastics World and Senior Technical Editor Design News

Bioplastics, Management, North America, Packaging ,

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