Dear Shareholders,
I hope this email finds you well.
Today, we issued a press release regarding a sizeable project we’ve had under development for several quarters now, and one about which we’re really excited. This project, located in Porsgrunn, Norway, is a first-of-a-kind integrated Carbon Capture, Utilization and Storage (“CCUS”) platform where LanzaTech is not only providing the Carbon Capture and Utilization (“CCU”) technology, but is also the project developer and will be the CCU facility operator. Building upon our deep experience with the six commercial scale plants currently using LanzaTech’s technology, this will be the first commercial-scale facility that we will operate, which is a meaningful milestone for us.
Eramet, which is a public company headquartered in France, will be providing the industrial off-gas feedstock from their manganese alloy plant in Porsgrunn, Norway. Eramet has ambitious CO2 reduction targets, and this facility brings the company closer towards their target of producing and offering a zero CO2 manganese alloy product for the benefit of decarbonizing the hard-to-abate steel value chain. Steel, cement, chemicals, shipping, and aviation are among the hardest industrial sectors to abate, and we see a number of avenues ahead where we can leverage and replicate the work we’re doing with the facility in Porsgrunn to provide cost-effective solutions to other companies grappling with the same issues.
The CCU component of this facility (Phase 1) is the first project that we will be submitting to Brookfield Asset Management for a final investment decision (“FID”) evaluation, as part of the Brookfield Framework Agreement we signed in October of 2022. We expect the FID process to be completed within the next six months. The Carbon Capture and Storage (“CCS”) portion of this platform is considered Phase 2 of the project, and we will keep you updated as the CCS phase develops. It’s worth noting that the CO2 co-product from our process is highly concentrated and therefore ideal, especially from a cost-effective standpoint, for liquefaction, transport, and sequestration.
Fluor is our Engineering, Procurement, and Construction (“EPC”) partner, and has already completed the Front-end Engineering Design phase (FEED study), and Sweco Group is supporting the project with best-in-class sustainability expertise and design acumen. The size of the facility is expected to be 24 kilotons per annum, and our current estimated in-service date is during 2028. The team is doing incredible work with this project, and we intend to leverage the design and engineering work for other ongoing projects and opportunities.
We are in the process of negotiating long-term ethanol offtake agreements for this facility, and as part of our Brookfield Framework Agreement, LanzaTech is entitled to 50% of the plant’s ethanol offtake, which we plan to market through our existing and emerging sales channels. The annual volumes that we will be marketing from this facility are material enough to represent a significant revenue uplift for us.
In other news, you may have seen that we recently announced that LanzaTech has been awarded $3 million from the U.S. Department of Energy to advance our existing capabilities of using CO2as a feedstock to produce isopropanol. Isopropanol is a common alcohol used in many everyday products like cleaning agents, and is a precursor to the propylene value chain. Propylene, which is a building block for packaging, medical supplies, automotive products, among many other applications, has a thriving demand market that is projected to approach $150 billion by 2030. We are currently producing isopropanol at pilot scale, and this project will enable us to push forward with initiatives to (a) increase the range of gas mixes we can use, (b) develop tailored microbial production strains, and (c) refine our process to be more efficient and cost-effective.
On the CarbonSmartä front, one of our largest customers, Coty, recently celebrated their 120thanniversary in Paris. We sent lab scale “bio-reactors” for their exhibition (pictured below), and Coty did a wonderful job promoting the event and their involvement with us during the celebrations and through their on-line marketing.
Finally, given we’re less than a week away from election day in the United States, I thought I would share a recent Bloomberg piece to which we contributed: Bloomberg News – The US Election Has Climate-tech Investors in a Wait-and-See Mode.
Best regards,
Jennifer
