Xanthan gum potential in China
China. Working with its joint venture partner Shandong Huanghelong
Group, the company has announced a significant capacity increase at
its Zibo production facility in Shandong Province.
The first phase of the expansion project will increase production capacity to more than 5,000 metric tons and will be completed by mid-2004.
Cargill says that the expansion will include a state-of-the-art analytical laboratory, a new wastewater treatment plant and a number of process modifications to improve plant operating efficiencies. It will also incorporate US good manufacturing practices (GMP) standards and establish Cargill as a major player in all xanthan gum market applications.
"We are extremely pleased with the progress the Zibo Cargill Huanghelong Bioengineering (ZCHB) joint venture has made since its inception in March 2003," said R. Creager Simpson, president of Cargill Food & Pharma Specialties, North America. "We have made tremendous progress in all areas of the business, both operationally and commercially."
Xanthan gum has functional versatility in a wide range of food, beverage and pharmaceutical applications. In 1980 the EU approved the manufacture of the substance under the E-number 415, some eleven years after the FDA cleared this high molecular weight polysaccharide as a food additive for the US market.
"Our value proposition is unique," said Weiyu Fan, general manager of the joint venture. "We will supply high quality xanthan gum, with other Cargill food ingredients, on a global basis at competitive prices."
Other European companies have also been looking to get into Chinese xanthan production. Danish ingredients group Danisco, for example, is looking to substantially strengthen its global share of the gum market, which is still dominated by hyrocolloid leader CP Kelco. In October, the Danish group agreed a joint venture with one of the largest xanthan gum suppliers in China, the Henan Tianguan group.
Before the joint venture, the company's plant - founded by the municipal government - primarily produced xanthan gum for the Chinese market. Now, the plant will target the international food markets, the largest being Europe and the United States. Danisco says that it will inject cash into the joint venture, with the aim of achieving a return that exceeds the cost of capital within three years.
"Xanthan is a new product in Danisco's product portfolio. As part of our growth strategy, we will be able to produce high quality xanthan and sell it at competitive prices to both internal and external customers," said Danisco chief executive Alf Duch-Pedersen.
With a total market value in the range of €230 million, growth rates for xanthan gum are currently coming in at the higher end - five per cent - of the generally lacklustre growth figures in the food ingredients industry.