Braskem produces ethanol-based plastic

Braskem produces ethanol-based plastic

	Published : Thu, 21 Jun 2007 23:22 By : Agencies Print this Story

NEW YORK (AP) - Brazilian chemical company Braskem SA said Thursday it produced the world's first polyethylene made entirely of renewable raw materials, capitalizing on the country's ethanol boom with a 'green' plastic for commercial use.

The petrochemical company, South America's largest, said it developed the plastic from ethanol made from sugar cane. U.S.-listed shares of Braskem jumped more than 5 percent on the news, nearing their 52-week high of $18.73.

Chief Executive Jose Carlos Grubisich said the plastic has the same characteristics as existing petroleum-based products and could potentially be used in a wide range of household goods.

'We are handing millions of consumers in Brazil and around the world a modern product for modern needs,' he said at a press conference in Brazil that was broadcast over the Internet.

Polyethylene is a common plastic used in a wide variety of consumer products, including plastic bags, carpet, drink bottles and food jars. Like traditional polyethylene, the ethanol-based plastic would be recyclable, Grubisich said.

Braskem has contacted Brazilian and international companies about possibly integrating the 'green' plastic into their product lines, Grubisich said. He declined to name the companies, citing confidentiality agreements.

'We are talking about global brands that are in North America, Europe and Asia,' he said in an interview with The Associated Press. Some only want to purchase the finished product, while others have expressed interest in investing in the production process, he said.

Beta Analytic, a Miami-based laboratory that specializes in carbon testing, certified that the new plastic contains 100 percent renewable raw material, Braskem said in a statement. A Beta Analytic spokesman said the lab does not comment on any work performed without written authorization from its clients.

Braskem is not alone in the emerging plant-based plastics business.

Metabolix Inc., a bioscience company based in Cambridge, Mass., last year set up a joint venture with seed and food-oil producer Archer Daniels Midland Co. to commercialize a biodegradable 'natural plastic' made by fermenting sugar from corn or sugar cane.

Meanwhile, chemical giant DuPont Co. and agri-processor Tate & Lyle PLC recently opened a $100 million facility to produce propanediol made from corn. The companies say the clear liquid can replace petroleum-based ingredients in certain types of plastic.

A DuPont spokeswoman said she did not expect Braskem's 'green' plastic to affect her company's renewable-products business.

'Those are two very, very different chemicals,' said the spokeswoman, Michelle Reardon.

Jefferies & Co. analyst Laurence Alexander said the different approaches illustrate how companies are seeking out new niches in the traditionally well-defined plastics industry.

'There is clearly more interest in the field and they are going to try to find green pathways in as many ways as possible,' he said. 'The barriers to entry are going to vary depending on which part of the market you are looking at.'

Braskem said its 'green' plastic is the result of a $5 million research and development project. Industrial scale production of the 'green' polyethylene is expected to begin at the end of 2009.

Brazil leads the world in ethanol production. Last month, the country forecast record production of 20.2 billion liters (5.3 billion gallons) for the current sugarcane season, which runs through April.

Braskem Vice President Manoel Carnouba said the company will need 2,300 liters of ethanol to make 1 metric ton of its new plastic. The company initially expects to produce 200,000 metric tons of the plastic, he said.

'It's a small proportion of total Brazilian production,' Carnouba said.

Because of the country's relatively cheap ethanol prices, Grubisich said he believes Braskem's 'green' plastic will be competitive with petroleum-based polyethylene given existing market conditions. He added that certain industries might be willing to pay a premium of 15 percent to 20 percent for the product.

'You have many market segments where this green technology creates more value interest than others,' he said.

Alexander agreed that some environmentally conscious customers might pay a premium for the new plastic. But he cautioned that Braskem for the most part will be competing against traditional polyethylene producers, and with them will be at the mercy of the oil markets.

'You are basically getting an arbitrage between the price of oil and the price of ethanol,' he said.

American Depositary Receipts of Braskem rose 93 cents, or 5.4 percent, to $18.14 in afternoon trading. In the past year the stock has risen from a low of $8.75 to peak at $18.73 last month.

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