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CSM buys up Cargill's shares in US lactic acid plant

By Jane Byrne , 22-Jul-2010

Global bakery ingredients supplier CSM said that it has acquired the remaining 50 per cent of the shares its US lactic acid production plant from its joint venture partner Cargill.

The Nebraska based facility has been a joint venture between CSM's subsidiary Purac and Cargill’s North American Corn Milling Division since 1997.

The plant produces natural L-Lactic acid trough a carbohydrate fermentation process for pH regulation along with shelf life extension and texture and taste enhancement for baked good and other food categories.

The production process employed at the US plant was jointly developed and patented by Purac and Cargill, with the global commodities giant being supplied with lactic acid for use in its polylactic acid (PLA) based polymers.

The Netherlands based CSM said that as the total output of the lactic acid plant was already fully dedicated to Purac, the transaction would not impact the ingredient’s market position, and the Dutch group added that the deal would have a slightly positive effect on its EBITA.

Non-food substrates

Earlier this month the CSM subsidiary announced that it had joined a consortium aiming to develop a process to produce feedstock from cellulosic waste derived from the pulp and paper industry in a bid to speed up Purac's programme to use non-food sources such as agricultural byproducts for its lactic acid fermentation processes.

Purac currently relies on sugars, glucose and tapioca starch as substrates for lactic acid production.

The project is part of the Dutch biorefinery programme and is partially funded by the Dutch government, explained CSM.

Bioplastics

Purac is currently building a lactides manufacturing unit in Thailand to produce monomers for production of PLA based bioplastics. The company is investing €45m in the new facility, which will have the capacity to produce 75,000 tonnes of lactides a year.

CEO of the Dutch company, Gerard Hoetmer, said that it expects to set up more lactides facilities in the coming years to cater to increasing demand for bioplastics, a market for which he expects growth of 40 per cent within the next 10 years.

According to Purac, which undertook a recent market analysis study, the PLA market is estimated to reach 3 million tonnes with a market value of US$6bn by 2020.

Hoetmer said factors such as consumer and retailer demand, environmental concerns in reducing carbon dioxide emissions, and lower crude oil supplies were driving the market.

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