Finally it was time. In the spring, the first pile of Avantiums’flagship plant‘ into the ground at the chemical park of Delfzijl. The chemical company has to prove itself with this factory. Will they be able to produce their FDCA, a raw material for bioplastic, on a large scale?
Investors’ patience has been put to the test, but the promise is great. FDCA is the main raw material for PEF, a bio-based and thus an environmentally friendly alternative to PET – known as the material of soft drink bottles.
Avantium has experienced setbacks since its IPO in 2017. The German partner BASF, with which the bioplastic factory was to be realized, withdrew from the collaboration. That cost Avantium time and investor confidence. And of course money. “Avantium had to look for new financing,” says Paul de Froment, who tracks the share for investment bank Bryan, Garnier & Co. “We succeeded, and that makes the company really interesting.”
Avantium, for example, raised 45 million euros this spring by issuing new shares and previously took out a loan of 90 million euros. With this, the company hopes to be able to move forward for at least three years. The plant is scheduled to be operational in early 2024.
Last week Avantium presented the results of the first half of the year. But investors are not really that interested in the turnover and profit figures. More important are the new contracts that Avantium has concluded with customers in recent months. These include big names: the Brazilian AmBev, part of brewery group AB InBev, the Danish brewery Carlsberg, but also the world’s largest conglomerate for luxury products Louis Vuitton Moët Hennessy (LVMH). “These contracts show that there is actually a high demand for FCDA and confidence in Avantium as a producer,” says De Froment.
Reg Watson, analyst for ING, points out another interesting development: one of the parties that signed a contract with Avantium will use FDCA for an application other than the manufacture of PEF packaging. This party does not want to disclose more, but, says Watson: “Apparently new, innovative applications for FDCA have already been found.” According to him, this indicates that the Avantium product has much more potential.
When it comes to FCDA production, Avantium has hardly any competitors worldwide, say both analysts. Avantium also makes other fabrics, including the so-called bio-MEG, an environmentally friendly alternative to polyester. There the company has an advantage over the competition. De Froment: “Avantium has reduced the number of steps in the production process of bio-MEG from four to one.”
Where many companies are now faced with shortages and delivery problems, Avantium is not bothered by this. Their raw material is sugar, which is “abundant,” Watson said. And sugar beets also grow normally in the Netherlands.
The only external factor that Watson says can cause “headaches” at Avantium is the shortage on the labor market. “Suppose the government decides to reopen the Groningen gas field, then there would be even more competition in that region for attracting expert personnel.”
In fact, the analysts see little risk for Avantium’s future. Why does the share value still remain around 3 euros? “We are still a year and a half away from an operational plant and the time when Avantium can sell licenses to other plants,” Watson said. “Investors often don’t look that far ahead.”
So on the stock market it is – again – a matter of patience.
A version of this article also appeared in the newspaper of August 29, 2022