Why did you choose India for your expansion plans?
Ahearn: We’ve brought a few technologies to the market where we’re starting to look at several options, particularly in the energy space. And that’s where India comes into play because we see a very strong fit in some cases between what we’re trying to do with these technologies and their capability on one hand and the needs in India on the other. And we think there’s an opportunity to bring the technology to the Indian market to build factories and production centres in India, and to create a pace in India that can serve not only the Indian market, but potentially global export markets and do that across a certain number of our technologies because our mission or our goal, aligns so well with India’s needs over the coming years.
There is an E-20 target to be established by 2030 in India, and the idea was to produce ethanol through sugar fermentation that is proving to be fairly expensive and difficult to scale through the sugar route. And so, we realise an opportunity to provide a scalable low cost, ethanol technology to achieve that target and but at the same time, use India’s domestic core resources to help unlock the economic value in the country. Coal resources and bring that together. And so a pretty strong value proposition in India. That’s how we started focusing on India.
What sort of investment can we expect in India from your side?
Ahearn: In India, it’s company-specific but in the case of Synata Bio, and [for] these biotech plants that we’re looking at are hundreds of millions of dollars worth of investment for plants. We’d be investing but alongside Indian partners. There will be an investment to build the factory, the laboratories and production facilities as well; it would be some hundreds of millions of dollars over the years if it’s successful.
Have you reached out to any Indian companies like Coal India, or some of the state-run oil companies who are big ethanol buyers?
Ahearn: We have. We’ve recreated a pretty broad stakeholder map. And, starting a process probably dates back even two years, 18 months of reaching out, communicating with a fairly broad group of stakeholders including those, as well as the government side.
What sort of relationship are you looking at with them— equity partners or technology partners?
Ahearn: We do need both. On the technology side, we would look to partners on the gasification. Our technology would be the second process in gas into ethanol, but coal into syngas initially, we’re not looking to do the gasification— there are a couple of Indian companies that can do that. So we’re looking to partner that way on the technology gasification partner. On the distribution and the off-take of the ethanol, we would be looking for partners too. On the ethanol plant investment, there as well. We would participate, but in conjunction with one or more of our strategic partners.
One of the key drivers in terms of ethanol as a fuel has been political keenness to support the sugar industry. Lots of farmers depend on it, and the government tries to help the sugar industry by taking ethanol from them, so they can pay the farmers better. You seem to be going against that.
Ahearn: I think it’s important to not go against that. If the goal is to achieve E-20 by 2030, then as much as sugar-based ethanol as can be produced should come into the market. But there’s going to be a sizeable gap. But I would think of it as this could supplement what sugar-based ethanol just can’t achieve over that time frame.
How much cheaper is your process than the sugar-based one?
Ahearn: If we look at our models, what we have moderated at small scales, in India we can do 20-30% cheaper. That would be our expectation. The price of ethanol through our route is determined significantly by the price of syngas. And the price of syngas is determined significantly by the price of coal. We think high ash low-grade coal could work better for this process. Over time, we could get high ash coal, demonstrate it at scale, get a pretty low price on that. Ethanol price could thus get lower- on the assumption that that resource isn’t going to be used anyway. So you’re extracting some economic value at that price point.