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Bioplastics: Taking Huge Profits, One Polymer at a Time

Written By Nick Hodge

Posted July 12, 2007

Plastics are pervasive. They’re everywhere. Ubiquitous, if you will.

Just take one evening meal, for example. Food packaged and wrapped in plastic, brought home in plastic bags, then cooked in Teflon-coated pans.

Leftovers are stored in plastic containers, while waste is discarded in plastic trash bags held in plastic trash cans.

And how did you pay for all that stuff? You probably paid with plastic.

Even things we don’t think of as plastic are plastic, in one form or another. There’s Kevlar, Gore-Tex, Teflon, epoxy, adhesives, and movie film.

And let’s not forget plastic surgery and plastic explosives.

You can see how this little exercise could go on forever. As the commercial goes, it’s plastics that make it possible. "It" being nearly everything.

Yet for all the plastic we use, do we really know anything about it?

How big is the plastics industry? How much do we use? How is it made?

These are questions to which few people know the answers. In fact, in a recent national survey, more than 70% of those asked did not know plastic was a petroleum-based product.

And 40% of respondents thought that plastic will biodegrade underground, in home compost, in landfills, or in the ocean. But plastics will not biodegrade in any of these environments.

It’s time to get a clue, and make some money in the process.

Plastics: It’s All About the Polymers, Baby

Plastics are polymers–long chains of atoms bonded to one another.

Perhaps ironically, the first synthetic plastics were made from cellulose–the most prominent component of plant cell walls–and called celluloid.

Back in 1863, this new material was used to make everything from waterproof shirt collars and cuffs to eyeglass frames and false teeth.

Yet celluloid still tended to yellow and crack over time, and it had another more dangerous defect: it was highly flammable.

Even so, the next generation of plastics didn’t come until after the First World War, when German company IG Farben introduced two new polymers: polystyrene and polyvinyl chloride. We know them today as Styrofoam and PVC, respectively.

Then, in 1951, two chemists from the Phillips Petroleum Company (now ConocoPhillips) discovered the polymers that would transform the way we lived for the next 60 years.

What they discovered were polypropylene (PP) and polyethylene (PE)–now the two polymers used to make the vast majority of the plastic products we’ve come to know and love.

From those discoveries stemmed other poly-products that we know, but don’t really know: polyurethane, polyvinylidene chloride (Saran), polyamides (nylon), polytetrafluoroethylene (Teflon), polycarbonate (CDs, DVDs), and everyone’s favorite, polyester (cheap suits).

All these products are plastics. And all these plastics are made from petroleum.

In fact, nearly 10% of U.S. oil consumption–approximately two million barrels a day–is used to make plastics, resulting in the emission of unfathomable amounts of greenhouse gases in to our atmosphere from oil production, transportation of materials, and factory emissions.

It’s an industry worth more than $400 billion, employing over one million people who produce more than 107 billion tons of plastic products every year.

But with the availability of cheap oil rapidly decreasing, the cost of producing plastic is quickly increasing–and the market is looking for a viable substitute.

And it may have found one.

Bioplastics: Coming Full Circle

As you now know, the first plastics were made from cellulose. And just like we’re seeing in the auto industry–electric cars outsold all others in 1899 and 1900–we’re going back to the original. With a twist.

A few companies are starting to make plastics from plant polymers on a massive scale. Granted, they’re not going to replace the 107 billion tons we use per year overnight, but I suspect they’ll begin to make a sizeable dent fairly soon.

Because not only are numerous cities banning the use of Styrofoam and some forms of traditional plastic, new bioplastic production techniques are now emerging that will make them economically competitive.

Fighting for the lion’s share of this nascent industry is Metabolix (NASDAQ: MBLX), which has already seen nice gains.

Metabolix, through its joint venture with Archer Daniels Midland (NASDAQ: ADM) called Telles, uses corn instead of petroleum to engineer the polymers necessary to make plastic.

The corn is introduced to microorganisms in a fermentation process that yields a polymer. The polymer is then made into pellets that are used to make different grades of paper coatings and thermoformed products. Think coffee cup and lid.

Check out their chart, paying special attention to late April, when they announced their joint venture with ADM:


And if you think that’s amazing, get a load of this.

Though not yet perfected, Metabolix has developed the ability to produce natural plastic from non-food crops.

With $15 million from the Departments of Energy and Agriculture, and in collaboration with BP, Metabolix has pioneered a way to produce the polymers they need directly inside plants.

Yes. They are going to metabolically engineer plants to produce polymers in their seeds and leaves.

Even better, after they extract what they need, the rest of the plant can be used to generate fuel in the form of biomass energy.

That means the clean, green, carbon-neutral production of quality plastic from plants–nearing the same cost as today’s plastics.

Plus, there’s nothing but opportunity in this industry. Metabolix’s first facility is scheduled to produce 110 million pounds of plastic annually. The global market is 107 billion tons. Looks like there’s a little room for competition here.

And Green Chip Stocks has been in on this movement since the beginning. In fact, our readers have seen gains on one bioplastic recommendation in excess of 60%. And that stock is just getting heated up.


In fact, while Metabolix is trading around $25.45 a share, our bioplastic superstar trades for only $0.61.

As well, this little $0.61 stock already has contracts with the EPA, Sodexho, U.S. Food Service, Aramark, Whole Foods, and a number of schools, colleges and national parks across the nation.

To find out more about this company, click here and become a Green Chip Stocks member today.

Until next time,

nick sig