Making a new market for biobased plastic possible

In the modern world, plastic materials play a prominent role. It is found in food packaging, our phones, laptops, cars, and more. A world without plastics is unthinkable. The challenge is to use less plastic and ensure that plastics are made circular and sustainable based on renewable resources. That would be a huge step towards a sustainable economy. Avantium works on this every day. Tom is proud of the company: “I lead one of the most promising chemical companies in the world, with an amazing team of more than 250 passionate and talented people from over 25 countries. It’s very energizing to work for a company that is highly innovative and at the same time involved in relevant sustainability transitions.”

Investment Round

Invest-NL has committed a loan of €30 million to Avantium. The loan is part of a three-year debt financing of €90 million provided by a consortium of lenders, besides Invest-NL, consisting of the four Dutch banks ABN AMRO Bank, ASN Bank, ING Bank and Rabobank. Each bank has committed €15 million in the form of a bank loan. Tom adds: “Thanks to the financing, we were able to make the investment decision for our FDCA Flagship Plant in Delfzijl. Construction of this plant is now in full swing. It means that there will soon be a factory that produces FDCA, the building block for PEF. This allows us to create a whole new market. It is a huge milestone for the bio-based economy and the world of circular plastics, and I think we can be proud that this technology was developed in the Netherlands and is being used on a commercial scale for the first time. Marjella adds: “By demonstrating with this factory that it can be produced on a commercial scale, Avantium is paving the way for the large-scale introduction of PEF. We expect that, following this factory, several more plants will be built under Avantium’s licence with higher capacity. “This first factory in Delfzijl is therefore an ‘enabler’ for fossil-free plastic production on a global scale.”

The problem with this type of ‘first of a kind’ factories is that they are normally difficult to finance due to the combination of technological and commercial risks. Invest-NL has played a crucial role within the consortium. The Dutch banks, together with Invest-NL, pooled their efforts to make the transaction happen. Tom: “The collaboration between the banks and Invest-NL demonstrates how a combined effort can meet the capital needs of an innovative and sustainable company like Avantium. With the role Invest-NL took in the process, they literally put their credo ‘we make unfinancible projects financable’ into practice. Marjella: “Financing a factory that produces a new material such as PEF is not common and falls outside the usual frameworks of financiers. Therefore, its financing really required custom solutions. All involved parties had to be flexible and creative. Our contribution to structuring this deal and the relatively large ticket (€30 million) has made this difficult-to-finance project feasible. ‘That is something to be proud of.’

Time to build a strong relationship

Avantium had already initiated contact with Invest-NL in January 2019, at a time when they were still in the startup phase. Tom: “Since that first contact, there has been ongoing dialogue. For example, a delegation from Invest-NL visited our Technology & Markets Day in 2019, where we announced our plan to build the world’s first commercial FDCA production facility. Also, in 2019, an Invest-NL delegation visited our FDCA pilot plant in Geleen. Over the past few years, discussions have intensified, and together with Marjella and Elwin, we worked towards the financing that was finalised in 2021.”

Creating Impact Together

The FDCA Flagship plant of Avantium becomes the world's first factory to produce FDCA on a commercial scale, with an annual capacity of 5 kiloton. Avantium believes that, beyond generating revenue and profits from product sales, the factory will demonstrate the possibilities of large-scale production and use of PEF to consumers, customers, and partners. This should pave the way for a massive expansion in PEF applications, with a potential total end market of $200 billion per year, which Avantium aims to access by selling licenses to industrial companies worldwide. On 21 February 2023, Avantium announced that such an initial technology license has now been sold to the American company Origin Materials, which will build a factory with a capacity of 100 kiloton.

Future

Elwin also looks further ahead: “It would be very nice if Avantium's technology could be scaled up quickly and used as soon as possible to produce fossil-free plastics. Additionally, we at Invest-NL hope to invest in even more great companies like Avantium, so that we can continue to accelerate the climate transition.”

Tom adds a personal note: “I hope that in 10 years we are fully in the transition of phasing out the use of fossil raw materials and that it has become normal to consider this in all aspects of life: your own energy consumption, generating renewable energy, food, transportation, clothing, housing, everything! In industry, I expect the global players to be clean-tech companies instead of oil and gas companies. What is needed: a combination of a sense of urgency, political will, and courage to change much faster, and for us to give the companies driving these transitions the space to innovate, scale up, and expand.”

ADD MORE