Lanxess boosts investment in renewable chemicals firm

Isobutene is a key raw material needed in the manufacture of butyl rubber, and traditionally this substance has been produced from fossil fuel sources. Yet Lanxess, the world’s largest purchaser of isobutene, believes that – in the words of its Board of Management chairman Axel Heitmann – it is “only prudent” to seek alternative supply options from renewable sources. For this reason the German specialty chemicals manufacturer recently increased its minority shareholding in US based renewable chemicals company Gevo Inc. Following a US$10 million private placement investment made in May 2010, Lanxess has now invested $17 million in Gevo’s initial public offering, giving it a 9.1 per cent shareholding.

Lanxess says its increased equity stake in Gevo “reflects the good progress made by both companies” in developing isobutene from renewable resources. “This investment also sharpens our focus on ‘green chemistry’ and sustainable production, which will gain in significance in the coming years,” Heitmann comments. In addition to the share deal, both companies have signed an agreement that gives Lanxess certain exclusive rights to purchase biobased isobutanol from Gevo, while Gevo receives an exclusive first right to supply Lanxess with specified quantities of biobased isobutanol over a ten-year period. This arrangement is subject to the parties’ completion of a definitive off-take agreement.

“We are extremely pleased that Lanxess has increased its holdings in Gevo,” adds Gevo CEO Patrick Gruber. “This new ten-year agreement further validates the technology and investment behind creating isobutene from renewable resources. It solidifies our strategic relationship with a global leader and enables us to better plan our future capacity growth.”

Conventional means of producing isobutene within steam crackers use various petrochemical-based materials as feedstock. The process developed by Gevo does away with these materials and instead relies upon a fermentation process to produce the organic compound isobutanol from the fermentable sugars in biomass, starting with corn. In parallel, Lanxess is developing a dehydration process to convert isobutanol into isobutene. Tests of the Lanxess process have been carried out in a small-scale reactor and show that the process can deliver biobased butyl rubber that meet tyre industry specifications.

“New fermentation processes have already led to new production methods for advanced motor fuels,” reflects Heitmann. “More significantly to chemists, they are also pointing to new ways to produce feedstocks for some of the most high-technology compounds science has ever devised. For example, the Denver-based Gevo has been making rapid progress in its efforts to produce isobutene – a key raw material for the manufacture of synthetic rubber – from biomass. If successful on a commercial scale, this process would provide the growing synthetic rubber market with a valuable alternative to fossil-fuel feedstocks. That means future generations will live in a world where the rubber that goes into tyres, pharmaceutical closures and even chewing gum can be made from sustainable resources.”

According to Heitmann, Gevo is now “conducting practical research, targeting production processes that are compatible with existing refinery equipment, that meet the price and production needs of industrial feedstock users, and that are calculated not to interfere with the global food supply.” The American company is currently retrofitting capacity of some 83 million litres (22 million gallons) per annum at its first ethanol facility in Luverne, Minnesota, to produce 50,000 tonnes of isobutanol in the first half of 2012. In addition, Gevo plans to expand its production capacity in the coming years through acquisitions and joint ventures and aims to have an annual capacity of more than 1.3 billion litres (350 million gallons) by 2015.

Heitmann admits that fossil fuels will remain an important part of the global economy “for decades, possibly even centuries.” However he notes that this research effort is part of a “paradigm shift” that is now taking place. “People may choose to think of this as our “Sputnik moment,” but today’s chemical revolution is already making the Space Race appear modest by comparison. The golden age of chemistry that has begun will ultimately reduce our reliance on fossil fuels and will generate sensible new ways to drive our cars, fly our planes, heat our homes and manufacture our products. We are committed to playing a part in launching this new era in history.”