Leaf Resources has taken two more steps towards commercializing its Glycell technology that can produce lignin and glycerol from waste biomass. It has signed an exclusive agency agreement with HB International, one of the largest glycerol brokers in the world, for the supply of raw glycerol and the sale of refined glycerol. The second step is entering the biodegradable packaging market, which offers short term revenue while it develops its major plant in Malaysia.
Managing director Ken Richards said biodegradable packaging is a $5 billion market. Leaf has licensed a biodegradable barrier coating that is applicable for paper and cardboard. The coating is renewable, biodegradable and recyclable, potentially providing a solution to the need to recycle disposable coffee cups, he said. The coating technology was licensed from QUT bluebox, the commercial arm of the Queensland University of Technology (QUT). The licence is for Malaysia, USA, Canada and Brazil.
The product enhances the economics of Leaf’s Glycell process as it utilizes two of Leaf’s core products, lignin and glycerol, he said. It will reposition lignin as a high value bio-based, renewable lignin barrier coating, instead of the company burning it as fuel.
The move is a low cost entry to the market and no capital is needed for initial production as the coating can be toll manufactured at competitive pricing.
The coating could deliver short term cash flow to Leaf within the next 12 months, said Mr Richards.
Initially, Leaf will buy lignin and glycerol and sell the coating product to paper companies to coat paper and cardboard. In the medium term, the new product will provide additional revenue for a commercial Glycell plant. In previous modeling the lignin was burnt for power generation.
Leaf is looking at three market segments. In the corrugated board market the coating can replace traditional, petroleum based wax coatings and various plastic coatings used to waterproof the paper or cardboard. In mulching markets, testing shows that barrier coating can replace black polyethylene as a mulch, with the additional benefit that it biodegrades to put beneficial carbon back in the soil. In food and beverage packaging, the products are biodegradable, recyclable and use renewably-sourced natural product.
Leaf said it is making considerable positive progress for a commercial Glycell plant in Malaysia. The progress is agreements covering the site, biomass, glycerol, government incentives and off balance sheet financing options.
The glycerol agreement with HB International is another step toward a commercial project. Although the commercial terms for the purchase of raw glycerol and the sale of the refined glycerol are confidential, Mr Richards said they reflect common market practice and rates. He said the agreement can provide a significant revenue stream.
The managing director of HB International, Jonathon Hemmings, said Leaf Resources and HB International will work together on the innovative Glycell process plant. “Malaysia is a great location for sourcing and selling glycerol given the availability of raw glycerol and transport links with south east Asia and China for refined glycerol.” (ASX: LER).