Big Algae chases Omega-3 dominance: DSM, Evonik underway on $200M algae project in Nebraska

DSM and Evonik have given a name to their joint venture to produce omega-3 fatty acids EPA and DHA from natural marine algae for animal nutrition — something that’s been traditionally been made from wild-caught fish oil. They’re calling it Veramaris — and they’re cutting out the middlefish, more or less, as Cellana CEO Martin Sabarsky frequently describes the similar capability of his team’s technology.

In another piece of news, the 50:50 joint venture — headquartered at the DSM Biotech Campus in Delft, Netherlands — has commenced construction of a $200 million production facility at the Evonik site in Blair, Nebraska. It’s DSM’s largest one-off investment in biobased production capacity since the building of the commercial-scale POET-DSM cellulosic ethanol plant in Emmetsburg, Iowa.

The news comes amidst confirmation that Corbion is in talks to acquire Bunge’s stake in SB Renewable Oils, the JV it originated several years ago with Solazyme. Corbion acquired the old Solazyme interest as TerraVia (as Solazyme was re-named) went into bankruptcy, and Corbion management reiterated its strong interest in the omega-3 segment via the AlgaPrime DHA product line. FeedNavigator is reporting that Bunge confirmed to shareholders, after dismal Q4 earnings, that it intends to exit both sugar trading and the renewable oils joint venture. Meanwhile, Bunge has not been able to shake off the persistent rumors that ADM is aimed at an acquisition, as the rounds of agribusiness consolidation continue.

All of which puts DHA and EPA under the microscope as a featured first “high margin, decent volume” product for algal technologies at scale — and places Omega-3s as a minor, but noticeable, driver in the acquisition wave.

The Nebraska biocluster
Meanwhile, let’s focus for a moment on Blair as a location. It’s a hub for Cargill, and Novozymes has co-located a massive enzymes plant, and Evonik makes lysine there. It’s become one of the spectacular bioclusters in the United States.

Commercial quantities of the algal oil rich in the essential omega-3 fatty acids EPA and DHA will be ready for sale in 2019. Pilot quantities for market development purposes are already available. The initial annual production capacity will meet roughly 15% of the total current annual demand for EPA and DHA by the salmon aquaculture industry.

Algae, algae, algae
OK, so it’s actually cyanobacteria (also known as blue-green algae) and not strictly algae, and cyanobacteria are genetically more distant from most algae than you and I are genetically distinct from salad mushrooms — but you get the idea, it’s commercial-scale industrial biotechnolology, and highly advanced stuff.

And the technology is different than most algae ventures, too. No open ponds, for one; Veramaris uses fermentation. It’s a technology that used to be independently owned, known as Martek Biosciences, and DSM acquired it several years ago. DSM and Evonik announced their intention to start this joint venture in March 2017.

The market background
Until recently, the omega-3 fatty acids EPA and DHA added to animal feed have been almost exclusively from marine sources such as fish oil and fishmeal, which are finite resources. Currently, a total of 16 million metric tons of wild fish are caught for the production of fish oil and fishmeal. By using natural marine algae, Veramaris contributes to closing the omega-3 EPA and DHA supply-demand gap, while helping to conserve marine life and biodiversity in the oceans.

1 kilogram of algal oil can replace 60 kilograms of wild-caught fish. And what is of particular interest here from a technical angle is that the production organism in this case makes 50 percent DHA and 50 percent EPA. Martek’s main focus had been DHA. Both are important – for heart health, cognition, joint health, eye health, mood, immunity and infant eye and brain development. The US, Canada, Brazil and India are relatively short on EPA and DHA in ordinary diets.

The Evonik backstory
In March 2016 we reported that Evonik was doing a whole bunch of corporate venturing — in all, looking to invest around $108 million in what it described as “promising start-ups with innovative technologies and in leading specialized venture capital funds as part of its venture capital activities. Regional focus areas are Europe, the USA, and Asia. Evonik currently holds shares in six start-ups and three funds. http://venturing.evonik.com/sites/venturing/en/

One of the first investments from that drive was the Series A round for JeNaCell, and Bernhard Mohr, the head of Venture Capital at Evonik said at the time that ”JeNaCell is an outstanding strategic fit for Evonik. The company’s technology supplements our competencies in biotechnology and in the area of delivery systems for active medical ingredients.” The products aim at medical cosmetology, laser treatments, and skin sensitivities or to supplement aesthetic procedures such as exfoliation. As documented by current studies, they have a long-lasting moisturizing, cooling, and soothing effect on the skin and support the natural regeneration of sensitive skin.

In July 2016, we reported that Evonik had commissioned a new plant for the biotechnological production of Biolys® in the Brazilian town of Castro in the state of Paraná. It has annual production capacity of around 80,000 metric tons. Biolys is an efficient source of the amino acid L-lysine and is used as a feed additive in modern animal nutrition — it’s what they produce in Blair (which has a 280,000 metric ton capacity).

But Evonik also has ventured into gas fermentation as well as algae fermentation. We reported back in 2013 that Evonik Industries and LanzaTech signed a three year research cooperation agreement which will see Evonik combining its existing biotechnology platforms with LanzaTech’s synthetic biology and gas fermentation expertise for the development of a route to bioprocessed precursors for specialty plastics from waste derived synthesis gas.

We published this look at Evonik’s Strategic Intent in 2016, here.

The DSM backstory
Amyris found a new deep-pocketed champion in DSM Nutrition in recent months, and DSM purchased the 40 million liter capacity Brotas production plant for $96 million, while Amyris focuses on completing its Brotas 2 plant, where it has not yet revealed the capacity.

The two companies announced a product development and production agreement for Vitamin A on a cost-advantaged basis utilizing Amyris’s and DSM’s capabilities. Once scaled, DSM will take the product to market utilizing its global channel and market access for animal and human nutrition and health.

DSM had previously made a $25 million equity investment in Amyris and the two companies in July last year inked an agreement to focus on a number of short- to medium-term product development & production opportunities in vitamins and other nutritional ingredients.

Elsewhere in the biobased space, DSM is actively working on the POET-DSM cellulosic ethanol technology, reporting last fall that they had achieved a major breakthrough in cellulosic biofuels production at its Project LIBERTY plant in Emmetsburg, Iowa. The company has solved the critical challenge in pretreatment, overcoming what has been the No. 1 hurdle to commercialization for producers around the world, according to their news release. Project LIBERTY is now running pretreatment at 80 percent uptime.

POET-DSM and other producers have identified the pretreatment stage in the past as the major chokepoint in commercial production. With a newly installed pretreatment system, designed by POET engineers, POET-DSM is now able to direct its attention to fine-tuning downstream processes and prepare for future licensing efforts that will spread this technology around the world.

Reaction from the principals
“Our algal oil, rich in both EPA and DHA, is our response to the industry’s call for a sustainable and traceable source of the omega-3 fatty acids EPA and DHA. Veramaris will now enable our partners along the value chain to grow in a responsible way and meet the demand for healthy animal protein rich in both EPA and DHA for consumer health,” says Kurmaly.

“Our goal is to establish the industry standard. We are committed to delivering consistent high-quality of the omega-3 fatty acids EPA and DHA. Drawing on our expertise in supply chain and logistics, we are able to transition customers to Veramaris as smoothly as possible,” says Beissmann.