West Sacramento-based Origin Materials Inc. said it's booked future sales of $7.4 billion for its zero-carbon wood extracts that replace petroleum to make plastic.
During a conference call with investors and analysts, Origin Materials co-CEO Rich Riley said the pre-sales in the first quarter were up from pre-sales of $5.6 billion in February, when the company released its year-end earnings, and up sevenfold from when Origin (Nasdaq: ORGN) announced it would become a publicly traded company in February 2021.
Origin is seeing strong demand from international companies for its products to meet climate-related goals, he said.
Origin uses patented techniques to make renewable extracts that replace petroleum to make plastic. The company’s first plant is expected to be completed at the end of this year, with a second plant to be completed mid-2025 and a third operating in 2027.
Riley said Origin’s pre-sales are based on five-year and 10-year capacity reservations.
The company also said construction costs for its first manufacturing plant are running over budget due to supply chain and material problems.
Co-CEO John Bissell said the cost of its Origin-1 plant in Sarnia, Ontario is running $15 million to $20 million over its initial budget of $110 million, which was forecast in February 2021. Origin is funding the additional cost from cash on hand.
The Sarnia plant is on track for mechanical completion at the end of this year, with startup next year.
Origin’s second plant, which is to be located on 150 acres in Geismar, Louisiana, doesn’t begin construction until the end of 2023, and the company anticipates it should be able to be brought in for its allocated budget. Bissell said. The company hasn’t begun ordering materials for that plant yet.
Origin's product is a drop-in replacement for petroleum in the manufacture of PET plastic, which is the most recycled plastic on the planet. The company’s products are being sought by manufacturers of everything from carpet and textiles to packaging and toys.
Riley said Origin has a new agreement with an international toymaker, though he declined to name it.
At the end of last month, Origin announced a partnership with Japan-based global chemical giant Mitsubishi Chemical Holdings Group to supply it with naturally derived carbon black, a product widely used in industry. Origin, in its earnings call, said the carbon black will come from the Origin-3 plant, for which a location has not yet been disclosed. Project development for Origin-3 will begin next year. Origin is generally looking for locations that have ready access to wood products, existing infrastructure and economic incentives.
Analysts asked if the company is planning to license its technology and process to partner companies, since the demand for the material is strong and growing.
Riley said Origin plans to “build, own and operate our own plants. We are open to discussions about licensing with partners,” but it is not currently part of the company's plans.
