West Sacramento-based Origin Materials Inc. has moved up to commercial-scale production at its first zero-carbon plastic chemical plant that uses scrap wood as its source.
The Canadian plant is the first manufacturing facility in the world making plastic-precursor chemicals at scale that don’t use any petrochemicals and yet are a drop-in replacement for them.
“This start of production at Origin 1 is a key inflection point in our effort to decarbonize the world’s physical goods,” said John Bissell, co-founder and co-CEO of Origin Materials, in a news release.
Shares in Origin (Nasdaq: ORGN) rose 20 cents, or 20.8%, to close at $1.17 Wednesday on the news.
Origin Materials makes zero-carbon PET plastic out of renewable plant materials, rather than petroleum. PET is the plastic most used in everything from bottles and packaging to textiles and tires. The company's product uses scrap wood or other organic products as a replacement for petroleum.
Origin shares fell sharply in August after the company announced that it also intends to begin selling other low-carbon chemical products and also low-carbon transportation fuel sourced from its next manufacturing plant, which is to be built in Louisiana.
Analysts in August said renewable fuel was a less profitable and a more competitive market than plastic replacement, which hurt the stock price, along with a longer timeline for construction of the company's second plant.
Origin also announced in August it would build its next plant in two phases rather than all at once. The company said the change in plans was a response to higher construction and capital costs as well as changes in product demand. The first phase is estimated to open in 2026 with full completion of the Louisiana plant estimated for 2028. That is compared to the previous estimates for the full second plant opening in 2025.
Bissell, talking from the stage at the GFX 2023 business and technology event in Roseville last week, said what most analysts don’t realize is that Origin creates a lot of in-demand chemical products and renewable fuel precursor chemicals in the process of making its intermediate chemicals to replace petroleum in plastic. The company is reacting to the market demand and seeking to get to profitability sooner.
The first plant, in Sarnia, Ontario, was completed on Jan. 27. The company has been commissioning the plant since June.
“As an operating chemical plant, Origin 1 proves our technology’s scalability and brings online an important manufacturing capability that helps us meet the growing demand for our technology and products as the world moves aggressively to a zero-carbon future,” Bissell said. “We are excited to expand the deployment of our platform now that we have achieved commercial-scale production.”
The Sarnia plant was a $130 million investment. Origin’s following plants will be more than $1.6 billion investments each.
