Tuesday, August 05, 2014

What Has Been Happening at Cobalt?

Since the beginning of 2013 Cobalt Technologies has raise more than $36 million to help further its efforts to convert biomass into butanol using a fermentation process and Cobalt’s proprietary catalyst.  Sadly the notice to the SEC of its financing efforts appears to be the only public statements coming from the company.  In a split with its previous habits that involved a steady stream of press releases, Cobalt Technologies has zipped its corporate lips tightly shut.

Before the company lost its voice, investors had been told the Cobalt had been successful in producing a batch of 100,000 liters of butanol.  Cobalt has said it would build a commercial scale plant in Brazil, one of the leading ethanol producing markets in the world.  The exact location is still apparently yet to be determined.  Two Asian partners were announced in what appears to be the company’s last press release, but remain unnamed.  Two years ago it claimed a strategic investment by a subsidiary of Bunge Ltd. (BG:  NYSE), but Bunge has never made so much as a peep about the deal. 

The butanol market is becoming more and more interesting for advanced biofuel producers.  Because it is hydrophobic, it can be transported in standard gasoline pipelines, something that represents a significant economic leap forward for ethanol producers who have had to struggle with transportation costs.  Importantly, bio-butanol has similar energy content to that of gasoline.

Cobalt Technologies may still be plugging along in developing its butanol technology. In July 2014, Chemical Week reported Cobalt Technologies had entered into a development and supply agreement with Andritz, Inc. to incorporate Cobalt’s biomass pretreatment process into one of Andritz’s pretreatment systems. 

It might be premature to predict Cobalt as one of those that gets ends up rusting along the road to advanced biofuels.  Then again the dramatic change in the company communications with the public suggest the company is experiencing some growing pains.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


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