Mascoma Gets New Cellulosic Ethanol Technology Through $51M Deal With SunOpta

9/2/10

Mascoma has grabbed improved technology for breaking down the raw materials it uses for making biofuels. The Lebanon, NH-based firm has acquired the SunOpta BioProcess unit of the Canadian food and mineral company SunOpta (NASDAQ:STKL) in a deal worth $51 million, according to a statement yesterday from SunOpta.

Mascoma, which plans to eventually use the improved technology at its first commercial-scale cellulosic ethanol plant in the far northern Michigan community of Kinross, will operate the SunOpta BioProcess business as a subsidiary called Mascoma Canada. The company is acquiring the bioprocess unit in a merger deal. Mascoma’s previous shareholders will have a 73 percent stake in the post-merger company, while SunOpta will own an 18 percent piece of Mascoma. The balance of ownership of Mascoma goes to those who owned shares in SunOpta BioProcess, according to Brampton, Ontario-based SunOpta.

The deal helps Mascoma advance its process for turning raw materials such as wood chips, switch grass, and organic plant waste into fuel for automobiles. While these organic products are thought to be more attractive than corn because they are cheaper and more abundant, cellulosic raw materials are difficult to break down to a point at which they can be added to the brew that ultimately yields ethanol. SunOpta BioProcess has so-called “steam explosion” technology, which uses high temperatures and pressure rather than expensive chemical-based processes to break down the raw materials. This technology complements Mascoma’s existing expertise in developing microbes for converting biomass, after it’s broken down through techniques “steam explosion,” into sugars that can then be fermented to make ethanol.

Bill Brady, Mascoma’s chief executive, said in an interview that his company pursued the deal with SunOpta to improve its future ability to offer a comprehensive and cost-effective system for producing large amounts of ethanol. “Now with the pre-treatment technology plus [our previous system] we feel twice as confident that we’ll be able to do that,” he said.

Mascoma is still assembling the necessary financial and technical elements to complete its Michigan plant, which the company is planning to develop through a joint venture with the Marquette, MI-based forestry products company J.M. Longyear. The facility is scheduled to open sometime in 2013. In its acquisition of SunOpta BioProcess, Mascoma is also taking on SunOpta’s stake in a planned cellulosic ethanol facility in Canada, Brady said.

Besides new cellulosic ethanol production technology, the SunOpta BioProcess business also provides Mascoma a small but meaningful revenue stream from sales of its pre-treatment equipment. In 2009, the bioprocess unit contributed $519,000 to SunOpta’s total revenue of $989 million, most of which came from its specialty foods and health products division called SunOpta Foods. Despite its revenue, the bioprocess business lost $3.3 million last year, according to SunOpta’s annual financial report. Brady said his company has a plan to minimize those losses under its ownership, but he did not provide specifics on that plan.

Mascoma said it also plans to integrate SunOpta’s pre-treatment technology at its test facility in Rome, NY, where Mascoma is validating its own internally developed process for making cellulosic ethanol in larger batches than those made in its labs.

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  • http://www.spec-eng.com/blog/ SPEC Engineering

    The acquisition of SunOpta by Mascoma represents a positive step towards producing ethanol on a commercial scale. These plants take several years to acquire resources for and build, but let’s see if Mascoma can hit their target of 2013. I think more deals like this now, along with forward-thinking legislation will help to give ethanol the boost it needs in the next 5 years.