Origin Materials growing capacity, partnerships

SACRAMENTO, Calif.—Origin Materials announced two recent deals designed to expand its reach in the rubber and plastics industries.

The Sacramento-based company signed an offtake agreement with distributor Intertex World Resources where Intertex would purchase sustainable carbon black that is 100-percent bio-content filler. Under the agreement between the two companies, pigment produced from sustainable wood residues is used rather than petroleum. This reduces carbon emissions and fossil resource consumption. The end product is a sustainable carbon-negative carbon black set of products for use in the rubber compounding and plastics masterbatch industries.

Origin also announced a partnership with ATC Plastics to bring its bio-content carbon black to the plastics industry. Origin's carbon black, made from Origin's HTC, is a versatile, 100-percent bio-content filler and pigment. Like traditional petroleum-based carbon black, it can be used in a wide range of applications including belts and hoses, mechanical rubber goods, tires, plastic masterbatches and toners.

The partnership with Intertex aims to produce carbon black for tires, including N660, N550, and N762 specifications, as well as for additional applications on behalf of mechanical rubber goods markets. Origin is a carbon negative materials company that has operated in the carbon black field for nearly a decade, said the company's Co-CEO John Bissell. The company has experienced double-digit annual growth in the space regularly.

Origin and Intertex developed a productive relationship within the last few years, culminating in this formal partnership.

"There's much higher turnover for hoses, seals and more because tires obviously will last a long time," Bissell said. "This helps us to expand our reach and partners us with a company that is much more than a distributor. This is a significant strategic step for us in the carbon black business."

Intertex is a distributor of synthetic rubber, carbon black, rubber chemicals and related products. The combined expertise of the two companies allows for the production and distribution of a sustainable carbon-negative carbon black set of products.

"We can make items that are hard to make in this space" Bissell said. Origin can do that because of its knowledge in chemical functionality from its nearly 150 current employees around the U.S. and Canada.

Carbon black represents an area of growth for Origin for three main reasons, Bissell said. First, it is a fossil-based and dirty process, which is challenging for new market entrants. Given how bulky the end materials are, there are large costs in building carbon black plants. As a result, competition is naturally limited even as demand remains high. Bissell estimated that the total market where Origin's carbon black lines are competing is over $7 billion.

"Customers are banging down our door," Bissell said. "We have cost advantages and performance advantages because we are (established). We're living in a supply constraint world and we just need to build more, faster."

The second reason for expected growth in the carbon black area is the sustainable impact products have on customers to drive demand. The average tire comprises about 33 percent carbon back based on mass. Origin's expertise allows it to create products that support carbon negative efforts.

Finally, carbon black allows users to keep existing polymers rather than investing in new ones, Bissell said. Carbon black is a reinforcing agent and filler that is used to strengthen a product's material by taking up space.

"Our customers see they don't have to change their polymer when they use it, and that's a big advantage because it saves time and money," Bissell said.

As part of the second announced partnership, ATC Plastics also will purchase Origin's sustainable carbon black. ATC manufactures black color concentrates and is headquartered in Ohio.

The partnership with ATC is similar to the one with Intertex because both are downstream suppliers that have specific and proven application knowledge, Bissell said. The agreement will allow Origin to bring its carbon black to masterbatch applications with proper positioning, he added.

Growth for Origin Materials is accelerating at a rapid pace, and that is likely to lead to additional partnerships. Since carbon back is made domestically, the biggest supply chain challenges for the company as it expands have been on the capital side, Bissell said. By 2030, he expects the company to produce carbon black at larger volumes, making it a "top three product" companywide—largely because of the number of applications it supports.

For now, though, Origin Materials' is adding capacity.

Its first commercial-scale plant in Sarnia, Ontario, will open before the end of 2022 with a "few dozen" employees. The company also expects a world-scale plant to open in Indiana in 2023, and it is planning to add roughly five additional carbon black manufacturing plants by 2030.

With the new plants comes the need for employees. Bissell said human capital is one of the biggest investments that Origin Materials will make in the next decade. The company is hiring process engineers and other engineering talent, application scientists, technical experts, plant managers and operators, among others. "The breadth and depth of our hiring needs is extensive," Bissell said. "We are always looking for talent in the (engineering and science spaces) we can plug in."

Origin is known for creating a platform that turns carbon found in inexpensive, plentiful, non-food biomass such as sustainable wood residues into useful materials, while capturing carbon in the process. It can support stable pricing and efficient production of a wide range of end markets, including clothing, textiles, plastics, packaging, car parts, tires, carpeting, toys and others.