Gevo signs Letter of Intent (LOI) with HCS Holding for commercial supply of isooctane
Gevo, Inc., has announced that it has entered into a Letter of Intent (LOI) with HCS Holding GmbH (HCS) to supply isooctane under a five-year off-take agreement.
Gevo, Inc., a US-based renewable technology, biochemical- and biofuels products company has announced that it has entered into a Letter of Intent (LOI) with HCS Holding GmbH (HCS) to supply isooctane under a five-year off-take agreement.
HCS is German-headed a manufacturer of specialty products and solutions in the hydrocarbons sector, operating under the brands Haltermann Carless, ETS Racing Fuels and EOS. HCS is owned by HIG Capital and Haltermann Carless, one of the oldest companies in the world of chemistry, is expected to be the direct customer with Gevo under the proposed off-take agreement.
Two phase deal
According to Gevo, the LOI outlines an off-take deal that will have two phases. In the first phase, HCS will purchase isooctane produced at Gevo’s demonstration biorefinery plant located in Silsbee, Texas. This first phase is expected to commence in 2017 and would continue until completion of Gevo’s future, large-scale commercial hydrocarbon plant, which is likely to be built at Gevo’s existing isobutanol production facility located in Luverne, Minnesota. Gevo expects revenue in the range of US$2-3 million per annum from the first phase.
In the second phase, HCS will agree to purchase approximately 300 000 to 400 000 gallons (≈ 1.14 – 1.51 million litres) of isooctane per annum under a five-year off-take agreement. Gevo would supply this isooctane from its first large-scale commercial hydrocarbons facility, which is likely to be built at Gevo’s existing isobutanol production facility located in Luverne, Minnesota. The LOI establishes an undisclosed selling price that is expected to allow for an appropriate level of return on the capital required to build out Gevo’s existing production facility in Luverne, Minnesota.
– Haltermann Carless and HCS will serve as a major and substantial off-taker of Gevo’s renewable isooctane from Gevo’s demonstration plant and a vital off-taker from Gevo’s first commercial hydrocarbon plant. Gevo and HCS agree to evaluate options to make the partnership most impactful and provide maximum credibility for Gevo’s next generation technology, said Henrik Krüpper, Chief Sales Officer and member of the HCS Group GmbH’s Executive Committee in a statement.
Biojet and isobutanol
Furthermore it is the intent of Gevo and HCS to establish further off-take arrangements for other products such as Gevo’s alcohol-to-jet fuel (ATJ) and isobutanol. HCS is expected to market and distribute Gevo’s products globally on a non-exclusive basis.
– We are very pleased to establish this commercial relationship with HCS Holding, which is world renowned in the industry for the high quality of its performance fuels. We expect that they will be an important customer and partner for Gevo. When we produce ATJ, we also produce other products such as isooctane and isooctene. We believe that a binding off-take agreement with HCS Holding is one more piece of the puzzle to validate our case for expanding the Luverne plan, said Dr Patrick Gruber, Gevo’s Chief Executive Officer.