A delayed second project and a move into biofuels has reduced the stock value of carbon negative materials firm Origin Materials.
Origin has touted its materials as potential replacements for conventional plastics feedstocks. In an Aug. 9 earnings release, Co-CEO Rich Riley said that, as Origin first indicated in May 2022, the firm "is facing a higher-cost capital project environment than in early 2021, when we announced the initial plan for Origin 2," which will be located in Geismar, La.
"As such, we are revising the plant's outlook and introducing a phased approach to construction," he added. "We expect that adapting in this manner to the high-cost environment will reduce project risk as we move forward on the path to profitability, with Phase 1 start-up projected for late 2026 to 2027 and Phase 2 start-up projected for 2028."
On that same date, West Sacramento, Calif.-based Origin announced a biofuels partnership with Proman, a maker of methanol and natural gas-based products based in Wollerau, Switzerland. As part of the partnership, the two firms signed an agreement to explore production and global distribution of low-carbon biofuels.
"Biofuel is a rapidly growing market," Riley said in a news release. "Low-carbon-intensity biofuels made from wood waste reflect the future of biofuels as industry moves aggressively towards decarbonization.
"Over the long-term, we see the potential for biomass-derived, low-carbon-intensity fuels to be used in marine and other transportation fuels, industrial applications, heat and power generation and more," he added.
Investor reaction to news of the delay and of the biofuels project was swift, sending Origin's per-share stock price from around $4.35 on Aug. 9 to $1.45 on Aug. 10 — a one-day drop of almost 67 percent. The price was at $1.35 in late trading Sept. 5.
The Sacramento Inno newspaper cited a report from stock analyst Pavel Mochanov saying that Origin stock faced a "painful reset after a sudden pivot to different products and higher capital expenses." Only months ago, Origin appeared to be solely focused on replacing petroleum in the manufacture of plastic, Molchanov said.
Mochanov, with Raymond James & Associates, told the paper that "everybody loves the concept of replacing petroleum-based plastic with more sustainable choices," adding in a research report "the addressable market is practically limitless."
News of the delay and of the biofuels project came only about six weeks after the firm announced the startup of Origin 1, the world's first commercial chloromethyl furfural (CMF) plant, located in Sarnia, Ontario. The facility had reached mechanical completion in January.
At the time, Co-CEO John Bissell said the startup was "a tremendous accomplishment and milestone in our journey to decarbonize the world's materials." He added that the plant represents "a substantial scale up" of the company's core technology platform.
Origin's platform technology converts cellulose, the structural component in the primary cell walls of green plants, into CMF and lignin (another plant structural component) into hydrothermal carbon (HTC). Woody biomass is Origin's feedstock.
CMF is a chemical building-block made from sustainable wood residues that can be used to make downstream products, including PET feedstock paraxylene and FDCA (furandicarboxylic acid), which can be used in sustainable products and materials such as next-gen polymer PEF (polyethylene furanoate).
The company already has several partnerships and offtake agreements in place, including a multi-year capacity reservation agreement with South Korean Hyosung Advanced Materials for PET and a hybrid polymer PET/F (a blend of PET and FDCA) for use in tire cord applications, HTC for use in battery materials, as well as furanic derivatives for use in spandex applications in the apparel industry.
Origin also is working with Thailand-based PET maker Indorama to explore converting an Indorama Ventures' U.S. facility into a bio-based materials plant to develop and commercialize low-carbon bio-based materials.
These latest initiatives add to Origin's existing partnerships and customer relationships with industry leaders including Danone, Nestlé Waters, PepsiCo, Ford Motor Co., Mitsubishi Gas Chemical, Solvay, Mitsui & Co., Ltd., Minafin Group, LVMH Beauty, Revlon, Mitsubishi Chemical Group, Kuraray and ATC Plastics.