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ADM to end commercial alliance with bioplastics company Metabolix

By Archer Daniels Midland Co. | January 12, 2012

Archer Daniels Midland Co. announced on Jan. 12 that ADM Polymer Corp., a wholly owned subsidiary of ADM, will end its commercial alliance with Metabolix Inc. on Feb. 8. As a result of this decision, Telles LLC, the sales and marketing commercial alliance created to commercialize the trademarked Mirel, a biobased plastic, will be dissolved, and Mirel production on behalf of Telles will end. Under the terms of their commercial alliance, ADM Polymer Corp. may provide polyhydroxyalkanoate (PHA) fermentation services for Metabolix during a three-year period following termination.

“We have analyzed our business portfolio, identifying areas that are not delivering sufficient results now or are not expected to deliver sufficient results within a reasonable timeframe,” said Mark Bemis, president of ADM’s corn division. “We have had a good working relationship with Metabolix, and the fermentation technology performed well at our facility. Unfortunately, uncertainty around projected capital and production costs, combined with the rate of market adoption, led to projected financial returns for ADM that are too uncertain. Therefore, we have decided to exit the business as permitted by the commercial alliance agreement with Metabolix.”

ADM Polymer has been producing Mirel at ADM’s integrated corn processing complex facility in Clinton, Iowa. There are currently approximately 90 full-time ADM Polymer employees at the Clinton polymer plant; in addition, there are a small number of ADM employees supporting the Telles sales and marketing efforts in Europe. ADM is currently evaluating the impact on staffing, and will make decisions on its needs as quickly as possible. For colleagues whose positions are affected, the company will offer severance packages, including outplacement services, and there may be opportunities for them to apply for positions at Clinton or other ADM facilities.

As a result of the change in circumstances and its decision to terminate the commercial alliance, ADM is evaluating other commercially viable uses for the fermentation assets in Clinton, but has not yet made any firm decision on alternative uses. As a result, ADM will record a one-time pretax charge in its second quarter of between $300 million and $360 million, primarily for impairment of the related production assets. ADM anticipates the cash portion of the total charge to be less than $5 million.

 

 

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