Small Cap Strategist is published by Crystal Equity Research an independent research resource on small capitalization stocks. Follow along as we discuss the most recent trends in the small-cap sector, investigate interesting companies and pan a few not-so-promising stocks.
the post “Licella’s Pot is Boiling”
on July 11, 2014, I described the progress Licella has made in developing its ‘supercritical
water’ process to produce biochemicals and fuel from waste biomass.Licella is not the only company that has been
working on supercritical hydrolysis technologies.Privately-held Renmatix based in Pennsylvania is
also using high heat to break down cellulosic materials into sugar-the
five-carbon sugar called xylose and six-carbon sugar called glucose to be
calls its process Plantrose and claims to have achieved success in a pilot
plant located in Atlanta, Georgia.Wood
chips served as the feedstock for those early attempts.Management speaks with confidence that the
process can be applied successfully to a variety of feedstock sources.The Plantrose process is completed in two
steps:1) separation of cellulose and
lignon from biomass and 2) treatment of a cellulose and lignon slurry with hot,
compressed water. The stream of sugar
molecules is then cooled and filtered.The
company plans to concentrate its sugar products to fit the needs of its
customers.End products could include
succinic acid, butanediol or acrylic acid, among other highly valuable industrial
potential customer is the world-class chemicals company BASF.In December 2013, BASF entered into an agreement
with Renmatix to jointly develop industrial chemicals with Renmatix
technology.BASF had put $30 million
into Renmatix almost two years earlier, so this is as much a matter following
through on its investment.The xylose that Renmatix plans to produce is
an important building block for BASF chemicals.BASF is counting on Renmatix to produce renewable sugars at lower cost
than has been experienced with other biochemical producers. Alternative production
technologies for renewable biochemicals rely on expensive enzymes or acids to
break down the cellulose.
is going to have to wait a while to place an order.Renmatix management has said commercial
production would begin in 2017 at the earliest.
The company will need capital to build out production capacity and it appears management is counting on a strategic investment from a partner for its commercial stage. Besides BASF, the company has partnerships with Virent in the U.S., UPM Kymmene
based in Finland, and Waste Management (WMI:NYSE). Both Waste Management and BASF among the development partners have already put money into the company's purse.
shift of aspiring cellulosic biofuel producers to biochemicals has been a smart
move as it appears the interest and potentially the capital is more readily
forthcoming from the chemicals industry.Renmatix is certainly a company worth watching right along with our
friends 'downunder' at Licella.
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of the Small
Cap Strategist web log, Crystal Equity
Research nor its affiliates have a beneficial interest in the companies