To promote the industrial development of PLA, China Zhongji Investment completed an equity investment in "Fengyuan Bio"
Recently, China Zhongji Investment completed an equity investment in Anhui Fengyuan Biotechnology Co., Ltd. (hereinafter referred to as "Fengyuan Bio" or "the Company"). Fengyuan Bio is a leading domestic polylactic acid (PLA) company, mainly engaged in the production and sales of lactic acid, polylactic acid (PLA), organic acids, amino acids and their derivatives. To date, the company is the only company in China that has achieved integrated production of the entire industrial chain from corn to lactic acid to lactide to polylactic acid. At the same time, relying on the National Engineering Research Center for Fermentation Technology platform, using five core patented technologies of strains, fermentation, extraction, purification, and polymerization, the company will focus on the development of three major industries in the future: biomaterials, bio-chemicals and bioenergy.
In recent years, Fengyuan Bio has been accelerating the construction of polylactic acid production capacity. After the planned production capacity is reached in 2022, the company's polylactic acid production capacity will become the world's largest. In terms of lactic acid production lines, the company's existing lactic acid production capacity has reached 180,000 tons/year, and it is expected to increase production by 500,000 tons in Anhui in the second half of 2022; in terms of polylactic acid production lines, the company's existing polylactic acid production capacity has reached 100,000 tons/year, and it is expected to increase production by 300,000 tons in Anhui in the second half of 2022. By the end of 2022, the company's total polylactic acid production capacity is expected to reach 400,000 tons/year, ranking first in the world. At the same time, the company has plans for new polylactic acid production capacity in Shandong, Hainan, Liaoning, Inner Mongolia and other regions, with the goal of achieving a polylactic acid production capacity of over one million tons.At the same time, Fengyuan Bio is actively developing new raw materials and accelerating the replacement of corn with straw. The company has already reserved the technology for producing polylactic acid using straw. In 2010, Fengyuan Group completed an industrial demonstration project using corn straw as a raw material to produce 5,000 tons/year of fuel ethanol and 1,000 tons/year of lactic acid, which passed the acceptance of the Anhui Science and Technology Department. The company expects to achieve large-scale production of polylactic acid series products using crop straw as raw materials by 2025. At that time, it is expected to break the barrier of high raw material costs and enhance the core competitiveness of products.
In terms of downstream applications, in the short term, Fengyuan Bio's polylactic acid production capacity will prioritize meeting the demand for biodegradable plastics. In March 2022, representatives from 175 countries reached an agreement at the UN Environment Assembly in Nairobi to end plastic pollution by the end of 2024. This agreement is internationally legally binding. Under the increasing policy efforts of various countries, biodegradable plastics are ushering in a period of explosive growth, and polylactic acid is the most promising material among them, with the largest future demand space. According to the implementation tasks in the "Opinions on Further Strengthening the Governance of Plastic Pollution" policy, combined with the progress of industry expansion, the demand for biodegradable plastics in China will reach approximately 4.11 million tons by 2025, of which the market demand for polylactic acid will reach 2.08 million tons, and the CAGR (22E-25E) is expected to reach 72.8%.With the development of polylactic acid modification technology, the replacement scenarios of polylactic acid are not limited to traditional plastics and films. The good biocompatibility, bacteriostasis, warmth retention, and rigidity of polylactic acid can be amplified through processing or modification technology, thereby expanding the application fields of polylactic acid, including bulk demand scenarios such as fiber products and green panels, high-growth expectation tracks such as carbon fiber composite materials and 3D printing materials, and high-value-added medical device applications. The demand elasticity of polylactic acid is promising.Wu Fushun, Partner and Managing Director of China Zhongji Investment, said that energy transformation and climate change are global issues facing humanity in this century, and both are closely related to carbon dioxide emissions and utilization. The polylactic acid bio-fermentation method based on synthetic biology has the advantages of easy large-scale production, good selectivity, and environmental friendliness. The substrate raw materials used are starch and other saccharides, which reduces the use of fossil energy. At the same time, the polylactic acid bio-fermentation method has a significant effect on carbon reduction, with carbon emissions reduced by more than 68% compared with traditional petroleum-based material preparation methods, which is in line with the national strategy of carbon peaking and carbon neutrality. China Zhongji Investment will continue to support Fengyuan Bio in promoting the industrial development of synthetic biology and bio-new materials, achieving the utilization and transformation of renewable resources, and transforming the "black gold economy" of petroleum and coal into the "green economy" of biomass processing.
