With the myriad economic opportunities for levulinic acid, the decision to focus early construction on fuel markets is an artifact of the economics of scale of biorefinery installations, and the risks common to all new technologies. 

  We believe that all advanced biomass processing facilities will be anchored by a high volume product.   There are dozens of high-priced, small-volume bio-derived chemicals with existing markets, and dozens more that hold great promise.   But even the most expensive specialty chemicals do not yield enough profit in their small volumes to support the construction of a full sized plant. The simple economics of these kinds of facilities is that they must obey the same laws of the product pyramid faced by oil refineries. Advanced, expensive, small volume products can only be produced if the bulk of the required capital expenditure can be supported by a bulk product.

 

 

 

   A minimum scale Biofine installation - even in co-location with existing industrial infrastructure - will be an investment in excess of $120 million.  Financing will require proof that we can sell the product, which limits us to established markets where we can obtain strong offtake contracts or sell into commodity markets. 

 

   Therefore, while there are dozens of high value chemical derivatives which can be created from levulinic acid, including both new compounds and alternative chemical pathways for existing products, tapping these markets is a gradual process.  Our customers for these specialty checmicals will be undertaking significant co-investment to use our product.  They are simply unable to do so until they can be confident in their supply.

  

   As with most chemical process technologies, the Biofine process benefits from economies of scale.  Per unit costs of levulinic acid drop significantly at biomass throughput levels in excess of several hundred dry tons per day.  Biofuels represent the  established, high volume market that can absorb this production volume.  

 

   Biofuels represents the base upon which to build the levulinic acid market, with large future profit opportunities once volume production becomes established. 

 

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