Algae oil company Solazyme has officially started up its commercial-scale factory in Brazil, working with food and agriculture company Bunge. It’s a big deal for Solazyme because its the company’s largest factory to date, and is supposed to reach 100,000 metric tons per year at full capacity. That’s almost five times more capacity than all of the product Solazyme is producing at its other two smaller factories in Peoria, Illinois, and Galva, Iowa.
It’s also important because it’s a major step for Solazyme to move into making algae-based transportation fuels at scale. Solazyme was one of the first biofuel startups to make the strategic decision to focus on food, nutraceutical and specialty chemicals first, before tackling the daunting fuel industry. Biofuels have to be produced for a very low cost at a very high capacity to be competitive with fossil fuels. The specialty chemical and personal care markets might be smaller, but the oils can be sold for a higher price and have a higher profit margin.
Solayme did do a small trial of its algae-based biofuel in select cities in Northern California towards the end of 2012. To my knowledge, it was the first time that algae-based biofuel was sold to actual drivers commercially.
At the Brazil factory, Solazyme is making algae oil and an algae-based encapsulated lubricant called Encapso. Solazyme started construction on the factory with Bunge in the Summer of 2012, and the factory is built next to Bunge’s sugarcane factory in the Moema region of Sao Paulo, Brazil.
Solazyme’s technology is based around engineering efficient algal strains and growing its designer algae in fermentation tanks without sunlight by feeding it sugar. Then, using existing industrial equipment, the company extracts the oil. The Brazil factory is using sugar from Bunge’s neighboring factory.
Eleven-year-old Solazyme went public in 2011, at $18 per share, and raised $198 million in the process. The company was also backed by $125 million in venture funding.
The Brazil factory was slightly delayed in starting up and Solazyme’s stock has taken a hit in recent months. But on the news that the factory is up and running, Solazyme’s shares jumped up by close to 9 percent to $10.59.