Welcome to the jungle: New entrants square up for battle in the algal ingredients market

While this market remains dominated by Martek (now part of DSM) and Lonza, a new breed of companies has recently entered the fray including Aurora Algae, BioProcess Algae, Renewable Algal Energy (RAE), Algae Biosciences and Solazyme Roquette Nutritionals (SRN).

Welcome to the jungle…​

But when will the promise translate into hard cash? And are investors right to have confidence in them?

SRN is probably the most advanced having launched its first products earlier this year, but is not going after the algal omega-3 market, focusing instead on food and supplement manufacturers with its lipid-rich whole algalin flour Almagine and high-quality protein ingredient Altein.

(Click here​ to watch our video interview with SRN president Jodie Morgan.)

The others, meanwhile, are steadily ramping up capacity to produce everything from high-potency EPA to biofuels.

Aurora Algae, RAE and AlgaeBio make their products using algal species that grow via photosynthesis in salt water benefiting from year-round sunlight, while SRN grows its algae via a heterotrophic (without sunlight) process in big vats to which nutrients are added.

Meanwhile, BioProcess Algae grows its algae on proprietary biofilms fed with waste heat and carbon dioxide from co-located ethanol production facilities.

But which method is the best and why?

BioProcess Algae:  We are the only company we know of producing algal omega-3s in this way ​

The USP of BioProcess’s technology is a high surface area, biofilm-based approach to enhance light penetration, productivity, harvest density and gas transfer – all traditional bottlenecks to low-cost algae cultivation - claims CEO Tim Burns.

His bioreactors do not require sugar as a feedstock and are instead plugged into the carbon dioxide exhaust gas stream of ethanol plants run by Green Plains Renewable Energy (GPRE), says Burns.

"Growing algae in open ponds is effective, but our approach is more geographically agnostic​. While the Martek approach is also effective, it relies on an abundant supply of sugar for the algae to grow. We don’t.​

“We are the only company we know of producing algal omega-3s in this way.”​

A joint venture between Clarcor, BioProcess H2O and GPRE, BioProcess hit the headlines recently after striking a deal with German firm KD-Pharma​ to supply it with EPA-rich omega-3 oils for nutra and pharma applications.

Under the deal, says Burns, “we are looking at a two-year development program, but they have committed to taking several tons of our oil. We’re also working with two other customers and talking to many more.”​

The firm’s first facility is at GPRE’s ethanol plant in Shenandoah, Iowa, but the plan is to deploy across GPRE’s nine facilities from Michigan to Nebraska to Tennessee, says Burns.

“There are 250 ethanol plans in the US so we are also talking to other CO2 emitters. Our technology can be rolled out very quickly. A 3GW utility plant in the US typically has around 1,200 acres of land with a significant buffer area around that so there is plenty of room for us.”​

As for algal strains, he says: “We’re working with numerous strains. We’ll get a product request and work with our biology group in Maine to identify the most suitable strains to optimize. We’ll then do an inoculant scale up before going into commercial scale production. ​

“We’ve developed three products recently in under nine months. But at any given time we will have multiple products on the go. There are also groups out there that might want to use our commercialization platform.”​

Aside from fuel, he says, most enquiries are about “sustainable alternatives to fish oil for long-chain omega-3 fatty acids for nutra and pharma applications. But there is also interest in carotenoids and high-quality proteins for food and feed.”​

Aurora Algae: What’s so elegant about our approach is how scalable it is​

Aurora Algae, meanwhile, claims it has the capability to produce larger quantities of higher grade omega-3s more efficiently than any of its rivals, and is engaged in a “massive scale up​” of its production facilities in Karratha, Western Australia, after proving from a demo site that it can produce almost two metric tons of oil-rich dried algal biomass per acre per month in vast open ponds.

Aurora gets the carbon dioxide it needs trucked (but soon to be piped) into its site from a nearby industrial facility, says VP of product management Dr Jim Astwood, who used to work at Martek/DSM, so is well positioned to compare different production methods.

“What’s so elegant about our approach is how scalable it is. We will have a very diverse portfolio with different ponds dedicated to different customers growing different products from high-potency EPA to Arachidonic acid (ARA), defatted algae for aquaculture and high-quality proteins for food and feed markets. ​

“But the initial focus is on EPA, which is from the same algae we use for biofuel, so we’re getting two oil streams from it.”​

While a new breed of genetically engineered canola oils containing EPA and DHA is set to hit the market by 2020, these oils will probably not compete directly with the high-potency PUFAs produced by Aurora that will target cardiovascular health applications, predicts Astwood, who also has a stint at biotech giant Monsanto on his CV.

“The GMO aspect could constrain them in certain markets, but there is room for multiple players in this market. Everyone will go after a different niche.”​

AlgaeBio: Near perfect growing conditions​

Andy Ayers, CEO at Algae Biosciences, also agrees that the GM canola is unlikely to compete directly with his firm’s EPA and DHA, which is produced from algae cultivated in ‘pristine’ saline groundwater from a site in Arizona where an underground salt dome interacts with underground sea the Coconino Aquifer, creating “near perfect”​ growing conditions.

The firm, which recently struck a deal to supply algal oil containing equal parts of EPA and DHA at a blended ratio of 40% to Global Health Trax, believes that its ultra-efficient production method and pristine sales water source will give it the edge over rivals.

(Click here​ to read our interview with Ayers.)

RAE: Unique, commercial scale opportunities for multinational companies​

Last but not least, RAE, which is developing an algal oil containing omega 3, 6 and 9 plus an algae protein isolate billed as an “ultra-premium alternative to soy and whey​”, claims it has “proprietary technology for the production of algae products that provides unique, commercial scale opportunities for multinational companies”.​

However, bosses at the firm, which grows algae in open ponds and harvests it via “a unique and patent pending low-energy technology process that doesn’t use chemicals”, ​have not disclosed when commercial quantities will be available.

Chief financial officer Victor Allen says RAE is “engaged in a capital fund raising effort”, ​and adds:“Because of the proprietary nature of this technology and the confidentiality of our business relationships we are unable to disclose additional information at this time.”​

Click here​ to watch our interview with Solazyme Roquette Nutritionals president Jodie Morgan at the IFT show.