Novozymes / Abegnoa - Biofuels market expanding worldwide

Lord Patel has frequently directed his readers to the premier position that Novozymes (and Abegnoa) have in supplying essential enzymes for preparation of biomass feedstocks for fermentation to produce ethanol for fuel for internal combustion engines either raw or mixed with mineral based fuels.

Novozyme shares (NZYM B and the ID code/ISIN DK0010272129) quoted in Copenhagen jumped 20 DKK nearly 5% today on release of Q1 2006 figures which show ;

1. Sales rose by 11% ,Operating profit rose by 14% and operating profit margin was up to 19.2%, compared with 18.6% in 2005

2. Earnings per share (diluted) rose by 5% to DKK 2.97.

Readers are encouraged to read a helpful essay on their website about bio-fuels and Novozymes role as a major supplier to world wide growth in producing so called bio-fuels by Larry Peckous, a principal scientist in Customer Solutions at Novozymes in Franklinton, USA.

"Where will fuel ethanol plants pop up next?"

Briefly ;

Europe

Whilst maize (corn) is a the most widely used ethanol feedstock in the USA, in Europe other traditional grains are used and Novozyme have produced Viscozyme® Wheat, Viscozyme Barley and Viscozyme Rye for more Euro specific cereals.

The EU has set targets of 5.75% of energy consumption in the transport sector by 2010 and 20% by 2020. Sweden, Germany, France and Spain are among the European countries that have come furthest towards meeting the targets.

10 fuel ethanol plants where enzymes are used in the process are in production , 7 use wheat, 2 use rye and 1 uses barley. Many large-scale dedicated fuel ethanol plants planned or under construction, which takes some 18 months.

The major player and bio-fuel pioneer is Abengoa, a Spanish company will operate the first plant (180 MN Euro investment) using maize (plus wine alcohol) is under construction (May '06) at Lacq in the south of France capable of producing 200,000 tons of fuel ethanol per year by 2008. The French Government having awarded an overall tax relief on 100,000 tons. Abengoa Bioenergy own 56 % of the operators AB Bioenergy France and the remaining shares are held by Aquitaine Industrie Innovations, Euralis, Etablissements Lacadée, Lur Berri, Maïsadour, Vivadour and Agpm.

Abengoa S.A. is a listed company based in Seville ((ABG.MC) Euro 22.00 close today up from Euro 13.35 over last year = 65%), they have 3 bioethanol facilities in Spain - Ecocarburantes Españoles and Bioetanol Galicia, and Biocarburantes de Castilla y Leon - with an overall installed capacity of 550 million liters per year and export ethanol.

Abengoa Bioenergy is also the fifth largest ethanol producer in the United States with an installed capacity of 365 million liters. (i.e 1 Mn litres per day.) As starch to ethanol conversion efficiencies have improved, Abengoa have lead in the utilisation of soluble co-products (i.e high protein biomass wastes) as animal feedstock has also been improved so improving the unvestment return on installed plants.

Eastern Europe

Interest in biofuels is growing in Eastern Europe , there is a plant under construction in Slovakia. Projects are under consideration in Bulgaria, Croatia, Hungary, Poland, Romania and the Ukraine, as well as in oil rich Kazakhstan and in Russia.

South Africa

Construction started on the first (of seven planned) maize based plant South Africa in May this year which will use surplus food capacity.... as millions starve in Zimbabwe.

Australia

Manildra are the largest ethanol producers with their Nowra plant in NSW using wheat and sorghum. two other Queensland plants in Queensalnd use Molasses from the sugar industry. Total production is an annual 90 million litres.

The Australian federal government’s target for 2010 is a production of 350 million litres. Four new plants are planned in Australia to process wheat and sorghum.

Manildra US produces industrial alcohols at its facility in Hamburg, IA. USA.

China

China leads Asia in etahnol production with an output of 3.8 billion litres in 2005 from 4 maize based plants and there are plans for rice straw biomass plants.

In June 2006, Novozymes announced a three-year cooperation agreement with CRAC (China Resources Alcohol Corporation) ( See Lord Patel's report ) to conduct research into developing this new technology based on the enzymatic conversion of cellulose.

Thailand

The fastest emerging market for fuel ethanol in Asia is Thailand. The Thai government’s goal is to use ethanol to replace the additive MTBE in gasoline.

The Gubment have a fuel excise tax exemption for ethanol and an income tax waiver for investors for the first eight years. Current plans are for 1 million litres of fuel ethanol per day in 2006 2011 target of 3 Mmn litres p, day) , their are 2 cassava root plants and 4 using using molasses. A third cassava plant will come in stream in December 2006.

Licences have been granted for building at least 14 plants using molasses and four new plants using cassava.

High gravity fermentation

There is increasing interest in so called high gravity fermentation. This technology allows less water to be used and as a result less energy is needed for cooling, heating and evaporation which means more compact, less costly plants. Where Novozyme have especial expertise)