Ensyn and Fibria establish strategic alliance for cellulosic fuels and chemicals in Brazil; Fibria to invest $20M in Ensyn
Ensyn Corporation and Brazilian wood pulp company Fibria Celulose S.A. have formed a strategic alliance that includes the establishment of an equally-owned joint venture for the production of cellulosic liquid fuels and chemicals in Brazil, as well as a US$20-million equity investment in Ensyn Corporation by Fibria.
The goal of the Ensyn-Fibria joint venture is to combine the strengths of each to create a major producer of renewable liquid fuels from cellulosic feedstocks. Ensyn and its affiliates have developed Rapid Thermal Processing (RTP) technology which converts wood and other non-food biomass into renewable liquid fuels and chemicals. (Earlier post.) Fibria has industry-leading expertise in fiber production as well as a significant Brazilian fiber resource and a substantial corporate presence in Brazil.
RTP is a fast pyrolysis process in which biomass is introduced into a vessel and rapidly heated to 500 °C by a tornado of hot sand and then rapidly cooled within seconds. The process generates a relatively high yield (i.e., approx 75 wt%) of liquid bio-oil from residual forestry or agricultural biomass.
Ensyn’s Renewable Fuel Oil (RFO) is a multi-purpose petroleum replacement fuel with uses in many applications, including heating, upgrading to transportation fuels and power generation in diesel engines.
The strategic relationship announced includes a US$20-million equity investment by Fibria in Ensyn Corporation, the Ensyn parent company. This investment will provide Fibria with ownership of approximately 6% of Ensyn and also provides Fibria certain rights, which, if exercised, would allow Fibria to invest additional capital and increase its holdings to as much as 9% of Ensyn. In addition, Fibria will be granted one seat on Ensyn’s Board of Directors.
Fibria will be joining a group working with Ensyn in the development of a global renewable fuels business based on Ensyn’s RTP technology including UOP, a Honeywell company. The UOP strategic alliance, which takes place through jointly held Envergent Technologies LLC, is related to the engineering and supply of RTP equipment and RFO upgrading solutions on a worldwide basis.
Ensyn’s current shareholders include Credit Suisse, Impax Asset Management plc, CTTV Investments LLC, a division of Chevron U.S.A. Inc., Felda Palm Industries Sdn Bhd, and Investeco Capital Corp.
This transaction is targeted to be closed by the end of October, including the signing of definitive documentation and payment. CIBC and Deutsche Bank acted as financial advisors to Ensyn regarding the agreements with Fibria referred to herein.
Fibria Celulose S.A., a Brazilian company, is the world’s leading producer of wood pulp, with production capacity of more than five million tons of pulp per year. Fibria’s production is supported by a forest base covering more than one million hectares, spread across seven states in Brazil. The company owns and operates three pulp mills in Brazil and also owns 50% of Veracel, a joint-venture with Stora Enso, also in Brazil. Fibria and has specific expertise in growing and producing wood fiber based on fast-growth eucalyptus.