The Netherlands-headed renewable chemistry developer Avantium N.V. and US-headed sustainable materials company Origin Materials, Inc. have announced a partnership to accelerate the mass production of furandicarboxylic acid (FDCA) and polyethylene furanoate (PEF) for use in advanced chemicals and plastics.
The partnership aims to bring the technology platforms of both companies together in order to produce FDCA from sustainable wood residues on an industrial scale.
FDCA is the key building block for the biopolymer PEF – a 100 percent plant-based, fully recyclable plastic material, with superior functionality and a significantly reduced carbon footprint compared to conventional plastics.
PEF can be used in a wide range of applications such as bottles, packaging, films, fibers, and textiles, which represent major end-markets.
We are excited to enter into this strategic partnership with Origin Materials, a like-minded partner committed to revolutionizing the chemical and plastics industry, said Tom van Aken, CEO of Avantium.
Combine of technologies creates a new route
This new partnership brings together Avantium’s proprietary “YXY Technology” which converts plant-based sugars into FDCA, with Origin’s patented technology platform which turns carbon found in sustainable wood residues into useful building-block chemicals such as chloromethylfurfural (CMF).
Bridging these two complementary technologies creates a route that can convert sustainable wood residues via CMF into FDCA. Avantium is currently constructing the world’s first commercial-scale FDCA Flagship Plant in Delfzijl, the Netherlands.
Avantium has signed offtake agreements for the supply of FDCA and PEF to major brand names and industry leaders for a range of applications, including Carlsberg, LVMH, and AmBev.
Origin Materials has recently reported that it has mechanically completed its first commercial manufacturing plant Origin 1 in Canada.
This plant is anticipated to produce materials including CMF from sustainable wood residues, which can subsequently be converted into high-performance products used in packaging, textiles, apparel, automotive, and other applications.
For Origin 1 and future plants, Origin has signed numerous capacity reservations and offtake agreements with well-known brand owners.
We are excited to partner with Avantium, a leading innovator and developer of sustainable chemistry, on a project with far-reaching impact. Together we aim to bring the value of FDCA and one of its main applications, PEF, to the industry at large and to drive decarbonization throughout the supply chain, said John Bissell, Origin Co-Founder, and Co-CEO of Origin Materials.
Industrial technology license agreement
The technology partnership between Avantium and Origin includes a non-exclusive industrial technology license agreement, providing Origin Materials access to relevant parts of Avantium’s process technology to enable the conversion of Origin-produced CMF derivatives into FDCA at a 100 kilotonnes per annum scale facility.
Under the technology license agreement, Avantium grants Origin a non-exclusive license to use certain parts of Avantium’s proprietary YXY process (including certain patent rights) for the purpose of (a) designing, constructing, and operating the licensed facility and (b) producing, using, selling and converting FDCA manufactured at that facility.
Avantium will also execute a development program under the license agreement to establish a bridge between Origin’s and Avantium’s technologies. Origin Materials expects to incorporate Avantium’s process technology into the supply chain for products from its future plants.
In support of the industrial technology license agreement, Avantium, and Origin Materials have made ancillary arrangements to develop the market for FDCA and PEF applications.
The technologies of both companies are highly complementary and will also enable the use of non-edible, renewable feedstocks for the production of FDCA and PEF, meeting the expectations of brand owners and consumers worldwide. This supplements the feedstock options for our technology. We look forward to working together on our shared ambition to transition the world to large-scale sustainable materials made from non-fossil resources, said Tom van Aken.
Financial terms
Under the terms of the transaction, Avantium received an upfront payment of €5 million in 2022. As a result of signing the industrial technology license agreement, Origin Materials will pay Avantium a milestone fee of EUR 7.5 million.
Origin agrees to pay Avantium subsequent license fees dependent upon the achievement of different development milestones. Following the commercial operations date of the licensed facility, Avantium will be eligible to receive royalties for each metric ton of FDCA produced at the licensed plant.
The license fee milestone payments and overall royalty rate are in line with industry practices and with previous guidance provided by Avantium.
Offtake agreement
In support of the industrial technology license agreement, Origin Materials, and Avantium have also entered into a conditional offtake agreement (COA), whereby Avantium will sell FDCA and PEF to Origin Materials from its FDCA pilot plant in Geleen (the Netherlands) in 2023 and from its FDCA Flagship Plant in Delfzijl (the Netherlands) as from the commercial operations date in 2024.
During the term of the COA, Origin will purchase a gradually increasing minimum annual volume of FDCA on a take-or-pay basis, which has the potential to enable Origin to accelerate the market adoption of FDCA and PEF.
Avantium continues to pursue its dialogue on additional offtake and industrial license agreements with other industrial partners to further expand and diversify the market for FDCA and PEF applications.
By combining Origin’s revolutionary platform, which can produce key FDCA precursors like CMF from sustainable wood residues, with Avantium’s YXY process technology, we aim to transform the polymers and materials industry. This partnership accelerates our efforts to bring economical non-food based FDCA and PEF to market, ended John Bissell.
