March 8, 2017

DSM and Evonik to establish 'algae' joint venture

Royal DSM and Evonik have announced their intention to establish a joint venture for omega-3 fatty acid products from natural marine algae for animal nutrition.

This breakthrough innovation will, for the first time, enable the production of omega-3 fatty acids for animal nutrition without using fish oil from wild caught fish, a finite resource. Evonik and DSM's alternative omega-3 source is the first to offer both EPA and DHA and will be aimed at initial applications in salmon aquaculture and pet food. The companies will together build a commercial-scale production facility in the United States.

DSM Nutritional Products and Evonik Nutrition & Care will each hold a 50% share in the joint venture and co-own the production facility, which will be built at an existing site of Evonik and is expected to come on stream in 2019. The joint venture plans to invest around US$200 million in the facility (US$100 million by each party over circa two years). The initial annual production capacity will meet roughly 15% of the total current annual demand for EPA and DHA by the salmon aquaculture industry. The set-up of the joint venture, to be named Veramaris and headquartered in The Netherlands, will be finalised subject to regulatory approvals and other customary closing conditions.

The joint venture follows the joint development agreement, signed in July 2015. Under this agreement, Evonik and DSM have jointly worked on the development of products and the manufacturing process and explored opportunities for commercialisation. Both companies achieved positive results in the development of the product while extensively working with the entire value chain, including fish feed producers, fish farmers and retailers.

Under the joint development agreement, DSM and Evonik have successfully produced pilot-scale quantities of the algal oil at DSM's production facility in Kingstree, South Carolina, United States. Customers will be able to receive sizeable quantities of the product for market development while the construction of the new manufacturing plant is underway.

Worldwide fish oil production is approximately one million metric tonnes per year. Most of the fish oil is used in aquaculture, mainly for fat-rich fish species, such as salmon. The limited wild fish stocks restrict the amount of fish oil available and thus the growth of the aquaculture industry. Currently, the industry uses about 75% of the annual production of fish oil. Evonik and DSM's algal oil will offer a sustainable non-fish alternative.

Just like humans, animals also need their daily intake of essential, long-chain polyunsaturated fatty acids in their diet to ensure healthy growth. Until now, these fatty acids have been added to aquaculture feed and pet food almost exclusively from marine sources such as fish oil and fishmeal. As the new algal oil can be applied in feed production in the same way as fish oil, it can easily be introduced by feed and pet food producers.

DSM and Evonik are also pursuing applications of their algal oil for other aquatic and terrestrial animal species.