Valero invests in Mascoma, signs cellulosic ethanol offtake agreement; inks LOI for up to $50M in equity

January 13, 2011 |

Mascoma execs at the feedstock delivery area of the company's demonstratino plant in Rome, NY. From left: Plant Director Eric Oleson; Senior VP Alan Belcher; Sr. Director, Process Engeneering Steve Licht; Biofuels Digest's Flavia Marples

In New Hampshire, Mascoma announced that Valero Energy  has joined as an investor in the company.

Further, Mascoma, Valero, and Mascoma’s operating subsidiary, Frontier Renewable Resources, (jointly owned with J.M. Longyear) have signed a non-binding letter of intent to support the construction of Mascoma’s 40 million gallon cellulosic ethanol plant in Kinross, Michigan.  Groundbreaking on the project is slated for later this year.

Under the terms of the letter of intent, Valero would potentially invest up to $50 million of the equity required to finance the project through Frontier Kinross LLC, a subsidiary of Frontier, and would enter into an off-take agreement for the project’s ethanol production. As further support of the project, Valero will provide project development and construction oversight services.

Frontier will use hardwood pulpwood, which is selectively harvested, naturally regenerated, and is an underutilized, abundant resource in the area surrounding the Kinross biorefinery. Mascoma’s 200,000 gallons of cellulosic ethanol per year demonstration facility in Rome, New York, has demonstrated the viability of the technology over the past two years and sets the stage for the commercial facility.

“Valero’s proposed investment in our first commercial-scale production facility proves the economic practicality of Mascoma’s technology for the conversion of woody biomass into ethanol,” said Bill Brady, Chief Executive Officer of Mascoma. “We are also thrilled to have Valero as a shareholder in Mascoma Corporation as there are many synergies even beyond the Kinross facility, where the technologies we have developed could be helpful to Valero’s business.”

“Adding Valero as a partner is the perfect addition to complete this project,” said Steve Hicks, Chief Executive Officer of Frontier Renewable Resources and President & CEO of J.M. Longyear, LLC. “The culmination of Mascoma’s leading Consolidated Bioprocessing technology, coupled with Longyear’s expertise in supplying the raw materials, is the perfect compliment for a leading oil company to come in as an equity and off-take partner.”

Mascoma recently announced the acquisition of SunOpta BioProcess Inc. (SBI), a world-leading fiber preparation and pretreatment company, creating a company with comprehensive capabilities for converting non-food cellulose (wood chips, energy crops and organic solid waste) into ethanol and high value co-products. With the addition of SBI and Valero, Mascoma has now covered the entire process of commercializing cellulosic ethanol, from raw materials supply, to pre-processing, through Mascoma’s CBP process and into final distribution.

2011 – Strategic investors rule

In our “Top 10 Biofuels Predictions for 2011,” we wrote: “#1. Strategic investors rule. Although project finance will make a small recovery, and the bond market will provide some liquidity for expansion of advanced biofuels capacity, fresh equity at the scale needed for commercial expansion is going to come increasingly from committed Strategic investors. We expect waste, pulp and paper, oil majors and national oil companies, and chemical companies, to be the biggest investors. Big Biotech and major oil & grains aggregators will be the other players increasingly active on the scene. At the same time, expect companies like Shell to sharpen their portfolio by focusing on their best expansion opportunities, and dropping technologies that do not meet near-term commercial or long-term value targets.

Further reading on Mascoma

Read our “Mascoma: Inside the SunOpta acquisition.”

Or, “Mascoma’s magic world for magic bugs“.

Or “Stellenbosch Biomass Technologies forms to commercialize Mascoma technology in South Africa.

Or, more from Mascoma at mascoma.com.


Further reading on Valero

Valero invests in Algenol.”

Valero expanding E85 distribution in Texas.”

Terrabon: Accelerating Commercialization of Waste-to-Ethanol.


Category: Fuels

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