NatureWorks Fueling the Innovation Cycle/media/ITR2012/2012/presentations/... · NatureWorks...

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© 2011 NatureWorks LLC

Marc Verbruggen

President & CEO NatureWorks LLC

www.natureworksllc.com

Innovation Takes Root – Orlando – February 2012

NatureWorks

Fueling the Innovation Cycle

http://www.natureworksllc.com/�

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Fueling the Innovation Cycle

•Value Drivers for the biopolymers Industry • Market for Ingeo • 2010 & Beyond: Key issues for the future

What has changed since ITR 2010?

2012

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What if …

• 5 billion products bio-packaged, end 2011

• Commits to begin conversion of its product to 100 % biobased packaging

• Shifts to biobased plastic for Health & Beauty lineup

• America’s favorite condiment repackaged in bio

• Automotive supply chain partnership for bioplastics

• Complete replacement of Polystyrene packaging

All a reality in the last year

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Value Drivers

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Environmental (consumer, retail, brand owners)

• Lower carbon footprint, less energy usage

• Better end-of-life options (litter, landfill, incineration)

• Target: lower environmental footprint of plastics

• Oil vs. plants feedstock cost (stability)

• Carbon or waste taxation • Target: create viable

alternate product portfolio (plastics)

Economic (plastics value chain)

Value drivers Biopolymers

(NatureWorks)

• Renewable feedstock vs. oil

• Reduce dependence on foreign oil

• Target: cellulosic bio-refinery concept (gas + plastics)

Strategic (governments)

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$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

USD

/lb

Economic (plasticsvalue

chain) Value drivers Biopolymers (NatureWorks)

PP: 44% swing

PET: 29% swing

ITR 2 – ITR 3

PET

PS

PP

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CORN

$5/bushel

STARCH LACTIC ACID LACTIDE

≈ $0.90/lb

PLA

Actual US data Q4 2010

OIL NAPHTHA

BENZENE

ETHYLENE

STYRENE $90/barrel

$1.00/lb

XYLENE

PS

MEG

PTA PET

$0.80/lb

At NatureWorks scale, Ingeo can be cost-competitive with PS and PET

1st myth about bio-plastics: “they are intrinsically more expensive than regular plastics”

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Plastic bag bans around the world # of bag bans passed per year

Anti-Litter and Marine Debris

Backlash

0 5 10 15 20

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Environmental Consumer,

Retail, Brands

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Backlash

In California – an example: • Clean Water Action • Algalita Marine Resources Foundation • Heal The Bay

0 5 10 15 20

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

• Californians Against Waste • Earth Resources Foundation


Retail, Brands

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0 5 10 15 20

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

In California – an example:

• AB 2138: Requires that all fast food packaging & take-out bags be recyclable, or compostable


Retail, Brands


Backlash

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Value drivers Biopolymers

(NatureWorks)

Strategic (governments)

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Bio-PE28%

Biodegradable Starch Blends

16%PLA15%

PHA12%

Biodegradable Polyesters

8%

Bio-PET7%

Regenerated Cellulose5%

Bio-PA5%

Cellulose Derivatives1%

PLA-Blends1% Others

1%

Durable Starch-Blends1%

Bio-PE26%


7%

PLA13%PHA

9%


9%

Bio-PET17%

Regenerated Cellulose

2%

Bio-PA4%

PLA-Blends2%

Others1%

Bio-PC1%

Bio-PP2%

Bio-PVC7%

Biopolymers Production Capacity by Type

Source: European Bioplastics

2010 ( 725,000MT)

2015 ( 1,710,000MT)

market growth 136%

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Bio-PE28%


16%PLA15%

PHA12%


8%

Bio-PET7%

Regenerated Cellulose5%

Bio-PA5%

Cellulose Derivatives1%

PLA-Blends1% Others

1%

Durable Starch-Blends1%

Bio-PE26%


7%

PLA13%PHA

9%


9%

Bio-PET17%

Regenerated Cellulose

2%

Bio-PA4%

PLA-Blends2%

Others1%

Bio-PC1%

Bio-PP2%

Bio-PVC7%

Biopolymers Production Capacity by Type

Source: European Bioplastics

2010 ( 725,000MT)

2015 ( 1,710,000MT)

PLA: 222,300 ton Ingeo: 280,000 ton (Blair + Thailand) Others: 120,000 ton Total: 400,000 ton (or 23% in 2015)

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Let’s talk market

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Three Era’s of Bioplastics in the Market

• Biobased is a niche • “Back end”, Litter

focused

“Bioplastics are for

Biodegrading”

“Bioplastics =

Plastics”

• New to the world polymers expected to be “all things to all people”

• Biobased is the expectation

• “biodegradable” where it’s the highest good

“Bioplastics sequester Carbon”

2000’s 2010’s 1990’s

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Bioplastics in the Market: Coca Cola

Coca Cola Presentation, June 2011

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Bioplastics in the Market: Novamont

Novamont Presentation Conference Presentation, March 2001, Miami

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Bioplastics in the Market: Braskem

Braskem Presentation, European Bioplastics Conference, November 2011 Berlin

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Food Serviceware

Nonwovens / Fibers

Rigids Films

Durables Lactides Bus. Dev.

Bioplastics in the Market: NatureWorks

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Ingeo Technology Platforms

1st Generation Ingeo Platform

‘3 series’ injection Molding

‘7 series’ ISBM - bottles

‘6 series’ fibers, nonwovens

‘4 series’ films

‘2 series’ thermoforming

‘8 series’ foam

Family of Polymers

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2nd Generation Ingeo Platform

L100 Lactide

L300 Lactide

L800 Lactide

Polymer grade

Industrial grade M3000 Lactide

Family of Polymers

Family of Monomers






‘8 series’ foam

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© 2011 NatureWorks LLC 22

Further Ingeo Plant I Investments

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3rd Generation Ingeo Platform

Family of Polymers

Family of Compounded

Solutions

AW 300 series Injection Molding

AW 200 series Thermoforming

3100 HP

3260 HP

6100 D

6260 D

Family of High %L Polymers






‘8 series’ foam

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“Elongation”

“Sti

ffne

ss”

Biodegradable ＋ bio-based Conventional Plastics

PET

PP

PS Starch

PLA

PE

PBS

Performance Properties

New generation of compounded Ingeo grades

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NatureWorks in 2015

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Blair, NE

Rayong Province, Thailand

2015 target: Ingeo resin structurally less expensive than PS (and PET)

In 2015 NatureWorks will have 2 Ingeo plants operational – Combined capacity: 320,000 ton (700 MM lbs) – Supported by 3 feedstock sources (corn, cane, cassava) – Stronger global commercial organization

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Ingeo™ Resin

Secondary Converter

Brand Owner Retailer Primary

Converter

Nature Works

PP

PS

Resin Distrib.

Economies of scale required throughout the value chain

Distrib.

PET

Resin premium

finished product premium

A context on cost position

2015 target: optimize value chain to make Ingeo products structurally less expensive than PS (and PET)

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Feedstocks…

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Bioplastic feedstocks

14.5 of today’s Ingeo plants can meet the 2011 NA PS demand

(4.8bn lbs)

2nd myth about bio-plastics: “They (will) impact food availability/prices”

With 1.65% of today’s sugar

production (cane – beet)

Source: NatureWorks, FAO crop statistics for 2009 production & NCGA’s 2011 World of Corn report

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Progress Against Vision: Renewable Feedstock Evolution

Where we are today

and long term . . . Where we’re going now

Dextrose from corn starch

Dextrose from cassava starch and

sugar cane

Feedstock Generation #

I

II III

Corn stover, switch grass and rice straw

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Feedstocks…

By 2015 NatureWorks will use 3 different 1st

generation feedstocks (corn, cassava, cane)

and

NatureWorks will have access to fermentable sugars from cellulosic

Switching from 1st to 2nd generation feedstock will be as much an economic as an environmental decision

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Ingeo feedstock Evolution

0

200

400

600

800

1000

1200

1400

1600

2003 2008 2013 2018 2023 2028 2033 2038

Mm lbs

Plant 3+: (Cellulosics)

(Bio-based Carbon Source Indicated)

Plant 1: (Corn Dextrose)

Plant 2: (Cassava, Sugar Cane, etc.)

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Market Driven Solutions

• Two Examples - addressing supply chain concerns: – Stonyfield & Working

– Landscapes Certification – Danone & ISCCplus Certification

• International Sustainability and Carbon Certification (ISCC) for the new Activia packaging – February 2012

• The ISCC seal assures that the entire supply chain for the Ingeo raw materials meets rigorous social and environmental criteria

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“End-of-Life…”

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“Nature doesn’t have a design problem, people do”

William McDonough and Michael Braungart, 2002

Source: Cradle to Cradle: Remaking the Way We Make Things by William McDonough & Michael Braungart

Ingeo & Cradle-to-Cradle

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Recycle X X

Incineration X X

Compost X Anaerobic Digestion X Feedstock Recovery X

Incum-bents Ingeo

Landfill

X X

3rd myth about bio-plastics: “There are no recovery (recycle)

options for bio-plastics”

Introduction phase: • Mixed waste stream • Energy recovery

Demonstrated At scale: • Sorting technology • Recovery technology

It’s now all about the economies of scale

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Recycle X X

Incineration X X

Compost X Anaerobic Digestion X Feedstock Recovery X

Incum-bents Ingeo

Landfill

X X



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Cradle-to-Cradle: Composting

• Composting of bio-plastics as such makes little sense – No energy recovery, no

carbon storage, no re-use

• Use of compostable items to divert organics from landfills makes a lot of sense

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Recycle Market Development

“Mechanical”

Plastics Recycle

“Chemical”

Feedstock Recovery

Post Industrial

Post Consumer

• Complimentary Sources • Complimentary Models • We’re working to develop both . . . • Common Challenges at the post consumer level

2 Sources:

2 Recycle Models

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Recycle Availability:

Post Industrial

Post Consumer

Short Term Long Term

Volume Availability

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Ingeo feedstock Evolution

0

200

400

600

800

1000

1200

1400

1600

1800

2003 2008 2013 2018 2023 2028 2033 2038

Mm lbs

Plant 3+: (Cellulosics)

Feedstock Recovery: Biobased Carbon from the Market ?

(Biobased Carbon Source Indicated)

Plant 1: (Corn Dextrose)

Plant 2: (Cassava, Sugar Cane, etc.)

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Cradle-to-Cradle The Foundation we’re working to enable by 2015:

• Nascent and growing r-PLA end-market

• Providing a “raison d'être” for the sorting of post-consumer PLA

• Beginnings of mechanical and chemical recycle infrastructure

• A composting industry which views bioplastics as an organics diversion opportunity

What’s Needed: economies of scale

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Feedstock (farming)

Resin (manufacturing)

Product (converting)

Retail Brand Owners

Consumer (disposal)

Bio-based Industry: Needs between now and 2015

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Feedstock (farming)



Retail Brand Owners

Consumer (recovery)


NEED: • Appropriate legislation to:

• Make 1st gen. feedstocks consistently available at competitive prices (no sugar quota)

• Develop 2nd generation feedstock infrastructure at large enough scale to become cost competitive

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Feedstock (farming)



Retail Brand Owners

Consumer (recovery)


High CAPEX in “commodity+” market US/European technology is moving abroad NEED: Appropriate incentive program to attract investment

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Feedstock (farming)



Retail Brand Owners

Consumer (recovery)


Existing converting equipment can be used Economies-of-scale will drive cost down NEED: Entire value chain cooperates to drive cost down

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Feedstock (farming)



Retail Brand Owners

Consumer (recovery)


Economies of Scale throughout value chain can easily be created by large Retail/Brand Owners NEED: Early buy-in of Retail & Brand Owners Careful selection of value chain partners

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Feedstock (farming)



Retail Brand Owners

Consumer (recovery)


Volume will create economies of scale for recycling NEED: appropriate regional recycle legislation NGO’s buy-in will reinforce consumer behavior

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When Henry Ford industrialized automobile production . . .

Closing Thoughts

Game-changing technology requires a “journey” approach

Did Ford’s potential customers, before buying their first car, ask Henry to:

• Build a complete national highway system? • Build a national network of service stations? • Build a national network of garages? • Prove that cars were better than horse drawn carriages

from a resource effectiveness point of view?

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Closing Thoughts

Then should we be insisting that the bioplastics industry must immediately:

• Move straight to cellulosic feedstocks although the technology is still in its infancy and the initial economics aren’t yet competitive?

• Have a robust recycle infrastructure up and running ahead of a critical mass of products in the market ?

• Provide a full-blown LCA for each and finished product ?

Game-changing technology requires a “journey” approach

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3M Fabri-Kal Nanjing Shengbo New Materials Technology Co.,Ltd Stora Enso OyjAccredo Packaging Far Eastern New Century Corporation Natureplas Sukano AGAhlstrom Nonwovens LLC Fiber Innovation Technology NatureWorks LLC Sukano Polymers CorporationAndersen Corporation FKuR Plastics Corporation Natur-Tec(R) SulzerArkema, Inc. Food & Biobased Research NEC Corporation Sulzer ChemtechAsean Corporation Futamura Chemical Co., Ltd. Nexeo Solutions Sustainable Biomaterials CollaborativeAspen Research Corporation Gala Industries NicePak Sustainable Bioplastics Council of MaineBASF Genomatica, Inc Nike, Inc. Synbra Technology bvBASF Corporation Genpak Nissan Chemical Industries, Ltd. SyntheZymeBASF Nederland B.V. Global Bioenergies S.A. Nisshinbo Chemical Inc. Taghleef Industries SPABASF SE Gneuss, Inc. NNFCC Taikoh USA, Inc.BD GOULSTON TECHNOLOGIES, INC. Onsemiro Inc. Taiyo InternationalBecton Dickinson Graham Packaging México Pack&Proper Co.,Ltd Taiyo Kagaku Co., Ltd.Ben's Land (UK) Limited Green Day Eco-friendly Material Co., Ltd PepsiCo Takemoto Oil & Fat Co., Ltd.BI-AX International Inc. Green Planet Plastic Suppliers, Inc Tecnologia del PlasticoBioAmber Greener Polymers / Natureplas Plastic Suppliers, Inc. Teknor Apex CompanyBioCor GSI Creos Corporation Plastics Technology Magazine The Chemical Daily Co., Ltd.Biopla Products Factory GSI EXIM AMERICA, INC Plaxica The Coca-Cola CompanyBlue Lake Citrus Products, LLC H.B. Fuller Company PolyOne The Dow Chemical CompanyBP Consulting, Inc. HallStar PolyOne Corporation The Eco-GroupeBritish American Tobacco Hefei Hengxin Paper & Plastic Co., Ltd Polyvel, Inc. Tianan Biologic Material Co.,LtdBroadway Companies, Inc. Hitachi Zosen U.S.A. Ltd. Portland Trail Blazers/Rose Quarter Tianjin Greenbio Material Ltd.,LtdBrueckner Group USA, Inc. Huhtamaki Films President Packaging Ind.Corp TJ Beall CompanyBrueckner Maschinenbau GmbH & Co KG IBM PTT Global Chemical Public Company Limited Toray Advanced Meterials Korea Inc.Cargill ICIS Chemical Business PTT MCC Biochem Company Limited Toray Industries (America), Inc.CBC America Corp ICO Polymer Specialty Powders PTT Polymer Marketing Co., Ltd. Total Petrochemicals BelgiumCelplast Metallized Products ICO POLYMERS Purac Toyobo Co.,LtdCereplast INDA Purac Biochem BV Toyota Tsusho CorporationChina Degradable Plastic Committee of CPPIA Independent Quimicoplasticos Trevira GmbHChina New Materials Holdings Limited Independent Photojournalist repurpose compostables, inc Uhde Inventa-Fischer GmbHClear Lam Packaging, Inc. InPro Corporation Resirene Ultra Flex Packaging Corp.ConAgra Foods Interfacial Solutions Rhein Chemie Rheinau GmbH UNIC TECHNOLOGY CORP.Consolidated Fibers Isolution Rho Renewables, Inc., Unitika Ltd.Control Laboratories Jamplast, Inc Risupack Corporation Universal Dynamics, Inc.Corinne Young LLC Jamplast, Inc. Robin Bio Plastic Co., Ltd University of MaineCSM Jim Lunt & Associates LLC Schlumberger University of TennesseeD&W Fine Pack Kao Corporation Seeplas Pty Ltd USDADandelion Research Limited Kao Specialties Americas LLC Segetis, Inc. Vender Service Co., Ltd.DaniMer Scientific, LLC Keurig, Inc. Shenzhen Esun Industrial Co.,Ltd Wacker ChemicalDart Container Kimberly-Clark Corp SKC Wacker Chemie AGDiafoods.co., ltd. King Yuan Fu Packing Co Ltd Södra Cell Western Plastics AssociationD-idea Kunimune Co. Ltd. Södra Innovation Wuhan Huali Environment Technology Co., LtdE.S. Robbins Corporation Kureha America Inc. Spartech Yunnan University of NationalitiesEco-Products Leistritz Spartech Color and Specialty Compounds Zhejiang Hangzhou Xinfu Pharmaceutical Co.,Ltd.Edg Productions LG Hausys Stepan CompanyEncon, Inc. M&G Finanziaria SRL STFI e.V.ES Robbins Maerkische Faser GmbH Stonyfield FarmEstilo Pack Michigan State UniversityEx-Tech Plastics Mirel Bioplastics by Telles

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