Merger creates carbon-negative leader

29th June 2021

Merger creates carbon-negative leader

On 24 June, the last barrier to the merger between Origin Materials and the special-purpose acquisition company (SPAC) Artius Acquisition was passed when shareholders approved the deal. The merger had originally been announced in February.

As a result of this, Origin is now listed on the Nasdaq. It all came eight days after private equity firm Apollo Global Management had agreed to invest up to $30 million in Artius in support of the combination and to buy a further three million shares on closing.

The transaction values Origin at $1.8 billion. It is expected to provide up to $925 million in gross proceeds, made up of $725 million from Artius itself and $200 million in fully committed equity at $10/share from others including Danone, Nestlé Waters, PepsiCo, Mitsubishi Gas Chemical, AECI and other private equity investors.

Origin said that it expects the transaction, together with anticipated financing and grants, should fully fund it until it is EBITDA positive, enabling it to scale production to meet signed customer off-take and capacity reservations of $1.9 billion. It expects its first commercial plant at Sarnia, Ontario, to be operational in 2022 with capacity of 25,000 tonnes/year. A second should follow in 2025.

Based in West Sacramento, California, Origin claims to be the world’s leading “carbon-negative materials company”. It has developed a process that treats lignocellulosic feedstock from non-food biomass with hydrochloric acid, to catalyse the hydrolysis and dehydration of cellulose and hemicellulose.

The reaction forms an alcohol that reacts with the acid to form the platform chemical, chloromethyl furfural (CMF). This in turn can be transformed into p-xylene, a precursor to terephthalic acid, the raw material for PET – hence so many beverage makers being interested. Other products include levulinic acid and furfural.

This technology is described as drop-in ready and expected to be cost-competitive with petroleum-based materials and much less than other technologies. It is claimed to address a ~$1 trillion market opportunity. Applications include clothing, textiles, plastics, packaging, car parts, tyres, carpeting and toys, while capturing hydrothermal carbon in the process for reuse as a raw material for carbon black and activated carbon.

Origin said that it expects the transaction, together with anticipated financing and grants, should fully fund it until it is EBITDA positive, enabling it to scale production to meet signed customer off-take and capacity reservations of $1.9 billion. It expects its first commercial plant at Sarnia, Ontario, to be operational in 2022 with capacity of 25,000 tonnes/year. A second should follow in 2025.

In addition, Origin has just formed a strategic alliance with software firm Palantir Technologies. It plans to use Palantir’s Foundry data integration and modelling technology to support the acceleration of its internal operations and “to help companies decarbonise their supply chains on their journey to net zero”.

For more information visit www.specchemonline.com/

View more Industry News

Latest News