Ingredient for plastic has global potential
It took more than 10 years for Ashburton-based LignoTech Developments to create a technology that turns organic waste material into an ingredient to make lightweight plastic, chief executive Garry Haskett explains.
This is interesting for makers of cars and trucks as they strive to produce lightweight vehicles to make them more energy-efficient, chairman John Rodwell says.
The raw material, corn residue, is worth 12 cents a pound as a stock food. After running through Lignotech's process, it is worth more than 70c a pound.
With the corn-ethanol industry in the United States alone responsible for more than 40 million tonnes of bio-waste a year, the potential is huge, Rodwell says.
LignoTech is the only company to have figured out the process of turning this waste material into a viable plastic ingredient, which is patented in several countries, he adds.
LignoTech, which is now raising millions of dollars in the US to build a plant, has come a long way from its humble beginnings in the back of a Christchurch garage.
In the early 1990s, engineer Andrew Rafferty wanted to make plastic using only natural ingredients, Haskett says.
After he conducted the initial research at home, Rafferty joined with research scientists to develop a sophisticated steam explosion that would turn raw organic material into a bio-filler for plastic. Trials were promising, and investors came on board to support the innovation.
LignoTech Developments was formed in 2002 with a pilot plant in Ashburton.
Rafferty died a couple of years later, but his innovation kept evolving. About $8 million has been invested to date in the technology to improve it and find the right application.
With new regulations in Europe and the US requiring car and truck makers to build more energy-efficient vehicles, Rodwell and Haskett knew they could provide a solution.
One of the ways to achieve better fuel efficiency is to reduce the weight of vehicles, and a lightweight filler for composite plastic can achieve this, Rodwell says.
The company partnered with industry suppliers in the US, manufacturers in Canada, and New Zealand Crown research institute Scion to perfect the material.
The final product looks like a fine coffee or cocoa powder and weighs less than half the traditional calcium carbonate (ground rock) it can replace in composite plastic.
In December 2012, the company's pilot plant in Ashburton burnt down. Rodwell said the fire hastened the decision to shift production to the US, where the raw material and end customers were located.
"We were focusing on the North American market anyway, and had to ship material here and back," Rodwell says.
The pair are now raising capital in the US, with a US$8.5m (NZ$10.3m) target to build a plant in Nebraska alongside the ethanol industry.
They have already raised enough money to buy the land, and hope to have the factory running at the end of 2014.
They expect turnover of more than US$5m in 2015.
"It's 10 years of research and development to come to this point. It's paying off and it's exciting," Haskett says.
Rodwell says it should be onwards and upwards from here, as the size of the market for bio-fillers exceeds US$1 billion. LignoTech plans to build other factories alongside ethanol plants, and process other industrial waste.
"We could be in South America processing sugar-cane residue, in North America processing sugar beet pulp shreds, or in Asia processing palm kernel."
Meanwhile, the company's 50 shareholders here and in the US are waiting for their return.
"We have a plan. We're very excited, but we've still got a lot of work to do to raise the capital, to purchase the plant, and get it up and running," Rodwell says.