Denmark’s Novozymes eyes more China biochemical deals

Denmark’s Novozymes A/S , the world’s leading industrial enzyme producer, is now in talks over a series of projects that will boost its presence in China\’s growing biochemical sector, a company executive said on Wednesday.

Michael Christiansen, president for Novozymes China, told a media briefing that the company was discussing projects with \”six or seven\” firms looking to produce value-added downstream products such as plastics and fibres from agricultural waste, a process encouraged in the country\’s 2011-2015 five-year plan.

\”What we have seen in the biochemical area is that we will have lots of projects. We have got three new projects this year, and next year I expect that would be increased to an additional six or seven, which are enabled under the incentives and aspirations of the new five-year plan,\” he said.

Further details about the projects will be announced in March, he said, adding that Novozymes was currently working to \”make the new technology fit with the new partners\”.

The company is already working with the Dacheng Group, the parent of Global Bio-chem, China\’s top corn processor, and Meihua Holdings Group, a major producer of food additives. Both use Novozymes\’ proprietary enzymes and technology to break down corn stover to produce sugar.

Beijing has restricted the use of corn for biofuel, citing concerns about food security and the need to guarantee supplies of animal feed. Industrial processors have instead been encouraged to expand through the use of agricultural waste.

But agricultural waste consists of cellulose, and the chemistry required to break apart its long starchy chains is complicated and requires the use of enzymes.

The Danish company has an exclusive enzyme sales contract with COFCO, China\’s top bioethanol producer. COFCO plans to expand its cellulosic ethanol output to 50,000 tonnes next year and double it further by 2013, said Christiansen.

\”Second generation\” biofuel from agricultural waste is not expected to become commercially viable until 2013, and COFCO has been trying to expand its biofuel output using alternative feedstocks such as cassava and sorghum, which are in short supply.

Li Bei, deputy head with COFCO\’s biochemical and bio-energy division, told reporters in May that China has the potential to produce 7-8 million tonnes of cellulosic ethanol by 2020, and COFCO aims to produce 45 percent of the total.

Expansion is being encouraged by Beijing, which may offer tax exemptions and subsidies as China aims to bring the share of renewable energy to 15 percent of total energy consumption by 2020, up from 8.3 percent in 2009, Li said.

Above-average rainfall hampered harvesting last season in the tropical eastern state of Queensland, home to most of Australia\’s canefields, while a cyclone damaged crops in the state\’s north in February.

This year\’s harvest of stood-over cane started nearly a month early, helped by drier than normal weather in some key cane producing areas, according to ABARES.

Globally, ABARES predicts the surplus in sugar production in 2011-12 will inflate world closing stocks by 7.2 million tonnes to 64.3 million tonnes.

This would increase the stocks-to-use ratio from 35 per cent to 38 percent in 2011-12, it said.

India is forecast to export around 3.5 million tonnes of sugar in 2011-12, based on current stocks and the forecast of 2011-12 sugar production, after being a large net importer of sugar in 2009-10 and early 2010-11

A bumper harvest in the Russian Federation in 2011-12 implies that Russian sugar imports will decline by 2 million tonnes in the year, to a forecast 0.7 million tonnes, according to ABARES.

This would be Russia\’s lowest sugar imports on record and well below the annual average of 2.4 million tonnes in the five years to 2010-11.

Meanwhile, a large harvest in the European Union will enable its sugar exports to non-EU countries in 2011-12 to exceed the maximum of 1.3 million tonnes permitted under its World Trade Organization obligations, it said.

On Tuesday, benchmark March sugar futures traded up 0.11 cent or 0.5 percent to 23.40 cents a lb. The contract has regained some ground after dipping to 22.71 cents in late November, the lowest level for the front month since June. (Reporting by James Regan; Editing by Ed Davies)

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