Ashland-Cargill joint venture to make bio-based chemicals

Ashland Inc. and Cargill have agreed in principle to create a new joint venture devoted solely to the development and production of bio-based chemicals. The parties intend for the new stand-alone entity to become a leading global supplier of chemicals from renewable sources.

The venture’s first product will be propylene glycol (PG). Using both licensed and proprietary technology, the joint venture will produce high-grade propylene glycol from glycerin, an abundant co-product of biodiesel production. The joint venture expects to provide global manufacturing and marketing of bio-based PG, starting with a 65,000-metric-ton-per-year plant at a yet-to-be-finalized location in Europe.

With a 50-50 ownership structure, Cargill and Ashland will bring to the new venture their unique technology, innovation and expertise in bio-processing, along with chemical formulation, supply chain management and market analysis. The venture anticipates a combined initial capital investment in the range of $80 million to $100 million. Details on the name, leadership and development plans are expected to be announced later in 2007.

“We believe the chemical market has reached a tipping point where bio-based and petroleum-based options are both desired by the market and practical to produce. To be in a position where Ashland can offer bio-based specialty chemical products in the future, we need to help foster the creation of bio-based basic chemicals now,” said Walter Solomon, vice president and chief growth officer, Ashland Inc. “We are creating our future and we’ve found a terrific partner in Cargill to do so.”

"For well over a century, Cargill has been all about adding value to products that come from the earth. Developing high-performing chemicals from renewable sources fits perfectly in that philosophy," said K. Scott Portnoy, Cargill corporate vice president overseeing its bio-based industrial businesses. "As an industry leader, Ashland is the ideal partner to help bring these products to market on a commercial scale."

The joint venture will combine the complementary experience and skill sets of both parent companies.

“Cargill’s expertise in converting vegetable-based oils is world class, its global reach is unmatched and its glycerin supply chain expertise will promote a quick market rollout. All this will provide a competitive advantage over other manufacturers attempting to produce any product derived from vegetable oils,” said Dave Jones, director of bio-products, Ashland Inc.

“Ashland brings the new joint venture expertise in global chemical marketplace understanding, formulation and marketing,” said Jim Stoppert, senior director of Industrial Bio-products for Cargill. “Ashland’s experience in formulating PG into a variety of specialty chemical applications will lead our efforts to produce a renewable product that is a seamless, high-grade solution for all PG end use applications.”

According to Ashland market consultants, annual global production for propylene glycol totals more than 1.4 million metric tons, and research shows that global demand growing at a 3 percent to 7 percent rate. Propylene glycol is a common ingredient in a variety of resins, lubricants, cosmetics, paints, detergents and antifreeze. Today, propylene glycol is produced from propylene oxide, a petroleum-based intermediate.

Laboratory tests of the proprietary production method have shown the bio-based propylene glycol product will feature a high level of purity. In testing, the process to be used by the joint venture is efficient and produces fewer byproducts than other alternative approaches to making renewable propylene glycol.

The Ashland and Cargill joint venture will offer manufacturers who use propylene glycol alternatives to the current petroleum-based products. Furthermore, bio-based products offer the promise of long-term sustainability.