Amyris Goes Industrial Scale with Bio-Chemical

Genetic engineering company Amyris (s AMRS) has opened its first industrial scale facility to turn sugarcane syrup into Biofene, a form of the industrial chemical farnesene, which is a fragrant hydrocarbon that’s used to make cosmetics, lubricants and other materials. It’s an important step for the publicly traded next-generation biofuel company, though the company is still a ways from reaching the commercial-scale biofuel production that it hopes to reach next year.

The Emeryville, Calif.-based Amyris got its start engineering bugs to turn sugar into anti-malarial drugs, and still earns revenues on that line of business. But it raised more than $244 million from a long list of investors, including Khosla Ventures and Kleiner Perkins, and went public on the Nasdaq in September, on the hopes of turning sugar into a diesel substitute.

In the meanwhile, however, Amyris makes a good chunk of its revenues by selling other company’s ethanol. While it will be adding revenues from cosmetics and lubricants this year, it doesn’t expect large volumes of biofuels until it opens a biofuel plant with Brazilian sugarcane producer Grupo São Martinho, in the second quarter of 2012, although it may produce smaller quantities of diesel this year, CEO John Melo said in an email.

Biofuel is a tough business for a startup to tackle, and the more promising technologies in the field have quickly formed partnerships with big oil companies to attain the needed scale. Chevron (s CVX) has invested in LS9 and Codexis; and Exxon (s XOM) is in a $600 million partnership with Craig Venter’s Synthetic Genomics to genetically engineer algae for biofuel. Other biofuel startups are inking deals with agriculture giants: Gevo, the Khosla Ventures-backed cellulosic ethanol company that went public this spring, has a partnership with Cargill.

At the same time, many are adjusting their plans to produce lower-volume but higher-value biochemicals to replace a host of industrial chemicals also produced from petroleum. Aurora Biofuels changed its name to Aurora Algae last year to reflect a shift to non-fuel markets. Algae maker Solazyme has long said cosmetics and foods were its first markets before tackling algae fuel, and has an investment from consumer products giant Unilever (s UN). Amyris, for its part, has a deal with Procter and Gamble (s PG) to produce chemicals to fit into its consumer products lines.

Amyris’s new farnesene plant feeds sugar cane syrup into three dedicated 200,000 liter fermenters at a facility owned by Biomin do Brasil Nutri?ão Anima. Farnesene now goes for about $1,000 a gallon, which makes it a lot more profitable than a gallon of fuel substitute, though for a much smaller market.

Amyris hasn’t specified customers for its new production, but says the farnesene can be turned into diesel to help Brazil meet environmental mandates, as well as turned into moisturizing agents for cosmetics and as base oils for lubricants. Amyris is finishing the chemical under an agreement with Glycotech.

Amyris is also working with Brazil-based sugarcane ethanol and electricity company Paraiso Bioenergia, as well as Tate & Lyle Ingredients Americas in the U.S. In the meantime, giants are treading the same ground — Dutch oil gian Shell (s RDS) and Brazilian ethanol/sugarcane giant Cosan plan a $12 billion joint venture to produce biofuel from sugarcane sugars and cellulose.

Image courtesy of Sweeter Alternative via Creative Commons license.