Global lactic acid & polylactic acid (PLA) market is growing at a CAGR of 18.7% and is expected to reach US$3831.

3 mln by 2016, as per MarketsandMarkets. The PLA Market is being driven by increased sustainability and reduced dependence on oil-based products as there is no other commercially equivalent or better bio plastic alternative available currently. Further technical advancement in production capabilities and enhancing properties of polymers will be fueling the growth. PLA has been seen as an alternative for polyethylene terephthalate (PET) due to its mechanical properties such as low impact strength, hardness, stiffness, and elasticity. The major hurdle that is currently inhibiting the growth of the market is supply limitations, and prices of PLA that are more than the fossil fuel-based polymers. The global Poly Lactic Acid market was estimated to be worth US$1194 mln in 2010. Packaging is the largest application market for PLA, accounting for 60% of the overall market in 2010. Europe and North America are the biggest markets for PLA; whereas Asia-Pacific is one of the fastest growing markets. The growth in the market of Asia-Pacific is expected to be fueled by countries such as Japan, India, China and Thailand. As per Markets and Markets, today, public concern regarding the environment, increasing desire of manufacturing companies to develop more sustainable products, limited fossil fuel resources, and climate change are important reasons for governments and companies to find substitutes to crude oil-based products. Bio-based plastics present huge potential to reduce the dependence on fossil fuels and the related environmental impacts. In recent years, PLA has emerged as one of the most popular bio-degradable plastics available in the market. PLA finds major applications in the food packaging industry, especially in frozen foods, ready-to-eat meals, and cutlery. Increasing awareness regarding the environmental consequences by the use of conventional plastic packaging is expected to drive the demand for PLA in the near future. This surge in PLA demand is expected to reflect in demand for lactic acid, as PLA is the largest application market for it. The technical developments in emerging bio-based plastics have substantially improved the properties of novel bio-based plastics such as heat resistance of PLA, enabling a much wider range of applications. Europe is the most dominant market for PLA while Asia-Pacific, owing to significant domestic demand, is expected to be the fastest growing market in the next five years. Cost competitiveness against alternatives is a key challenge for industry participants along with the growing mismatch in the supply demand scenario. The global PLA market is currently witnessing supply restraints as there are only a few major suppliers on a global platform. However, market players are increasingly focusing on increasing production capacities; especially in the Asia-Pacific region owing to the cheap availability and wide abundance of starting raw materials such as sugarcane, sugar beet, and tapioca in the region for lactic acid production. Growing demand for PLA is expected to drive the lactic acid market in the near future. Lack of supply capabilities on the part of market players is perceived to be a key issue for the lactic acid market in the near future. The global lactic acid market is dominated by North America, accounting for 35.8% of the overall market in 2010. Europe and Asia-Pacific are the second and third largest markets for lactic acid; accounting for 29.9% and 29.2% of the overall market respectively in 2010. Industrial applications are the largest for lactic acid, accounting for 42.4% of the overall market in 2010. In the last few years, industrial applications have surpassed food and beverages as a leading application for the consumption of lactic acid. This has primarily been a result of strong growth in the PLA and solvents markets for which lactic acid is the primary raw material. The various applications for PLA include packaging, textiles, electronics and medical. The key players include NatureWorks LLC (USA), Purac (The Netherlands), Pyramid Bioplastics Guben GmBH (Germany), Archer Daniels Midland Company (USA) and Henan Jindan (China). As per SRI Consulting, the United States continues to be the largest consumer of lactic acid, followed

by Western Europe and China. The United States surpassed Western Europe as the largest consumer of lactic acid in 2001-2002 with the commissioning of NatureWorks' polylactic acid (PLA) plant in late 2001. In mid-2009, NatureWorks expanded its PLA capacity in the United States with an additional 70,000 ton unit. In 2008, PURAC started up a 100,000 metric ton lactic acid plant in Thailand. In the last several years, lactic acid consumption for industrial applications has surpassed the food and beverages industry as the leading market for lactic acid. This shift is expected to continue as growth rates for industrial uses will be much higher than growth rates for other uses. This is a result of the continued high growth of PLA applications. It is expected that by 2013, industrial applications will account for more than half of global lactic acid use. The following pie chart shows world consumption of lactic acid, its salts and esters: In recent years, Asia has become nearly equivalent to Western Europe as a consumer of lactic acid products. All three major regions-the United States, Western Europe and Asia (driven mainly by China)-will continue to show strong annual growth at 7%, 9% and 5.5%, respectively, in the next few years. Globally, lactic acid consumption will continue to increase significantly, at about 7% pa from 2008 to 2013. Growth in demand for lactic acid, its salts and esters in industrial applications will be driven mainly by lactic acid-based biodegradable polymers and, to a lesser degree, lactate solvents. The use of polylactic acid, especially in the plastics packaging, container and cutlery markets, is being highly promoted because of its environmentally friendly characteristics. Environmental benefits include product biodegradability; composting of waste by-products from PLA production; growth in the use of plant-based materials, which reduces carbon dioxide in the atmosphere; and the potential energy saved vs conventional polymer production. In the United States, PLA demand for industrial applications such as fibers, containers and packaging is expected to continue to increase. Likewise, demand for PLA will increase significantly in Western Europe, mainly for packaging uses. The main obstacles to large-scale use of biodegradable lactic acid-based polymers in packaging applications are cost, environmental legislation concerning waste disposal and composting, and consumer attitudes and behaviors concerning the environment. Also, there is ongoing debate about the true amount of energy (often in the form of fossil fuels) consumed to produce PLA from raw materials such as corn. With large-scale production, prices are expected to continue to decline; however, lactic acid-based biodegradable polymers are expected to remain more expensive than commodity polymers in the near future. The food and beverages market will also continue to drive lactic acid growth. In the United States, lactic acid will continue to be used mainly as an acidulant but will also continue to grow in the ready-to-eat meat industry. However, growth will depend on the prevailing economic situation. Likewise, growth in this market for Western Europe and Japan will be moderate. In China and other Asian courntries, growth in the food and beverages market will be stronger as lactic acid will continue to be used in local foods, as well as food fortifiers and pH adjusters. Pharmaceuticals and personal care products have become an important market for lactic acid, its salts and esters. This market will continue to increase steadily in the United States and Western Europe, while China will experience stronger growth in this area. Uses include intravenous solutions, shampoos, soaps, anti ageing alpha-hydroxy skin creams and moisturizers.

A wonder chemical that will help make biodegradable plastic Why India needs to milk the full potential of Lactic Acid by M V Ramesh Bangalore, April 2, 2001 A century ago, plastic was one of man's greatest inventions, but today it stands a trifle disgraced as man has realised the menace of this non-degradable polymer. For plastic, it is a journey of no return due to its non-perishable nature. Indeed it is a daunting task for man to mitigate the environmental threat posed by plastic. After its unchallenged applications in the industrial world for over half a century, will plastic be trashed with the eco-hazard ignominy merely because it can't be trashed? Some of the latest bio-technological inventions seek to answer this question. A clue to one such question can be had by recent research reports from the Agriculture Research Services (ARS), USDA, the American Agricultural department, which clearly gives the thumbs-up sign for lactic acid. Lactic Acid is the building block of Polylactic acid [PLA], which would ultimately be the input for producing biodegradable plastic. The USDA survey indicates that lactic acid can be produced by utilising agricultural products like cornstarch and fibrous crops residues like the residue from sugarcane industry etc. During the initial stage, traditional lactic acid manufacturing units eject large volumes of calcium sulfate and salt wastes that pose a serious disposal and management problem for the industry. Now, American scientists at the ARS have resolved the issue and applied for patent protection "on an invention that can team microbes with the machinery to produce more lactic acid at less cost that too without salt waste". The present global demand for lactic acid is estimated at 70,000 MT and India is only a minuscule market recording a current demand of 560 MT. Considering the global market trends, agro-based chemicals hold a promising future and the demand for lactic acid is expected to shoot up to 200,000 MT by the end of year 2011. PURAC, the Netherlandsbased company dominating the world in Lactic Acid production, had recently forecast that if the production of biodegradable plastic catches on, the world demand for PLA and Lactic Acid would shoot up. The companys forecast seems to be turning true. Cargill Dow LLC, a joint venture between two renowned world leaders - Cargill Incorporated and Dow Chemical has invented a new technology to produce performance polymers entirely from renewable resources - such as natural sugars derived from plants corn, wheat, beets and rice - and use fermentation to create lactic acid (a food additive) and some simple refining steps to create polylactide polymers. What makes the lactic acid and its derivatives so endearing is its varied uses other than for biodegradable plastics. According to USDA Scientists, "The chemical is commonly used in foods ranging from soda to sausages because it preserves, enhances flavour or imparts desired acidity. Derivatives of lactic acid such as the solvent ethyl lactate can also be used in manufacturing electronic products, cosmetics textiles, paints, adhesives, de-inkers and degreasers. Eco-friendly, chlorine-free ethyl lactate could also supplant most of the market for petroleum- derived solvents." India is yet to explore the full potential of PLA and its multi-usage across various industries even though there are a few successful manufacturers of lactic acid. There are

many reasons for the slow phase of growth in production of this chemical in India. First of all, most of the late entrants in the field failed in their attempt to produce lactic acid, synthetically or otherwise. For instance, Orchem Ltd. an associate company of Atul Drug House ran into technical problems after having ventured into setting up a 300-TPA Lactic Acid plant. Secondly, the existing units seldom resort to invest in research and development of molassesbased chemicals and Lactic/Polylactic acid applications. Domestic demand for lactic acid is expected to touch 2000 tonnes in 2011 from the present demand of 560 tonnes. The slow growth in demand is yet another discouraging factor for any new investor entering this field. India is considered to be a major producer of molasses and according to the present trend, molasses-based chemicals like Oxalic acid, Citric acid and Lactic acid - offer a huge export opportunity, though many industrialists are either unaware or uncertain about the business potential. Indian sugar mills produce about 8 million tonnes of molasses, of which 14 per cent is exported annually. At the same time, the country imports molasses-based chemicals for domestic markets! Why cant India produce molasses-based chemicals itself than importing from other countries is the question. Thirdly, the Lactic Acid market within the country is not well developed and the usage of this chemical is minimal. Even the existing manufacturers - Lactochem Ltd. a Mahadi group company and the Munirabad Chemical Company of Karnataka - are eyeing export markets where they can expect a better price. Prathista Industries of Andra Pradesh and Interspice Biotech of Chennai are the other two ventures coming up to explore the Lactic Acid markets. Undoubtedly, the global plastic industry is caught in the stream of bio-technological developments right now. It is certain that research and development on Lactic and Polylactic Acid will open doors for a more promising future for the chemical industry. Will India be able to fall in line with the biotech revolution and develop the technology from a lab flask level to the commercial production plants?

Molasses-based chemicals hold promise'

M. Ramesh CHENNAI, March 23 ALTHOUGH India is a major producer of molasses and there is a growing demand the world over for molasses-based chemicals, the huge export opportunity is being lost, because, principally, the Indian industry is not fully aware of the business potential in this area. Sugar mills produce around 8 million tonnes (mt) of molasses, which is projected to increase to 10.5 mt over the next ten years. About 14 per cent of the molasses produced today is exported, without any value addition. On the other hand, the country impo rts molasses-derived chemicals. For the first time, a detailed study (commissioned by the Centre and conducted by a consultancy company called Nandini Chemical Consultancy) has identified some molasses-based products and the business potential for each of them.

The study's report has been submitted to the Government (which may be expected to form the basis of a Molasses Policy), and was also the subject of discussion at a seminar organised by Nandini Consultancy in Chennai recently. The study, which advocates setting up of plants for the identified molasses-based chemicals, makes two postulates for its recommendations. First, the price fluctuation of molasses in the country is immaterial because the value addition in the manufacture of these chemicals is so high that volatility in prices is inconsequential. Second, the target market is the world market and any entrepreneur who wants to first establish a ``good domestic base'' might as well look for opportunities elsewhere. Oxalic acid: Used in textile and detergent, plastic, pharmaceutical and film industries, oxalic acid is a ``sunset'' chemical in the developed countries. In India, oxalic acid is produced from sugar, by a dozen-odd companies, most of them Mumbai-based. T he total installed capacity is 30,000 tonnes and the production is of the order of 22,000 tonnes, of which about 9,000 tonnes are exported. To produce one tonne of oxalic acid, 2.5 tonnes of molasses would be required. The global demand is estimated at 250,000 tonnes, which is projected to grow at three per cent every year. Nandini Chemicals recommends a minimum economic size of 15,000 tonnes, which will call for an investment of about Rs 17 crore. There is, however, a small catch. The technology for producing oxalic acid from molasses still requires some fine-tuning. Two companies have attempted to produce oxalic acid from molasses instead of sugar but both attempts failed. One was a Chennai-based company called Krebs India, which put up a 300 tpa plant at Pondicherry. The other was Punjab Chemicals and Pharmaceuti cals Ltd, the largest producer of oxalic acid through the sugar route. Mr Venkataraman believes that both attempts failed not because of any fundamental technology problems, but because of teething trouble, to solve which funds were not available. Krebs India could not bring in fresh funds to solve the problems, while Punja b Chemicals was not willing to. He says that with a little R&D push, a unit would be able to produce oxalic acid from molasses. Producing the acid from cane molasses would be very cost-effective and India would be able to take a substantial share of the world market. The cost advantage can be gauged by the fact that while it takes 600 kg of sugar to produce one tonne of oxalic acid, it takes 2.5 tonnes of molasses to produce the same. Citric acid: Unlike oxalic acid, the technology for producing citric acid from molasses is established and available. This chemical is mainly used as a preservative in food processing, pharmaceutical and cosmetic industries. It is also used to manufactur e sodium citrate, used in the production of detergents. Seven tonnes of molasses would be required to produce one tonne of citric acid.

The global demand for this chemical is estimated at 703,200 tonnes in 2001, which is projected to increase to 1,040,900 tonnes by 2011. Correspondingly, the domestic demand is set to rise from 12,000 tonnes now to 38,475 tonnes by 2011. Here again, a huge export opportunity exists, as India, being a major producer of molasses, can produce this chemical at competitive rates. The study suggests that if a 20,000 tonne plant is set up, then by the year 2011, the country can export some 4,610 tonnes, still accounting for only 0.4 per cent of the world market. Although the study recommends a 20,000-tonne plant, Mr Venkataraman believes the Centre should encourage establishment of at least 50,000 tonnes, which can lead to harnessing of overseas business opportunities. One discouraging aspect in setting up citric acid units in the country is the track-record of other units. Atleast three units viz., Bharat Starch Industries of the Thapar group, Citric India Ltd of Mumbai and Andhra Citrates of Hyderabad, have failed so far. However, according to Mr Venkataraman, these units are not in operation due to various reasons such as change in the priorities of the management and lack of additional funds. There are other units in the country (Citurgia Biochemicals of Mumbai) and abroad, which are doing well and an enterprising entrepreneur should be able to make profitable investments in this area. Lactic acid: Described as ``the chemical of the future'' because of its use in the manufacture of polylactic acid, it is reckoned that polylactic acid could substantially replace plastic bags, since it is bio-degradable. Five tonnes of molasses would be needed to produce one tonne of lactic acid. An indication of the huge potential that this chemical offers for the future is provided by the fact that two of the world's top chemical companies, Dow Chemicals and Cargill, (though competitors in the market) are collaborating to put up a 125,000-tonne plant, which is likely to commence production in 2002. Once the product picks up, the two companies propose to raise the capacity to one million tonne, perhaps by the year 2005. The global production meets the demand for this chemical which is today only 70,000 tonnes, but the advent of the ``bio-degradable plastic'' is expected to drastically change the demand scenario. Here again, a few companies have successfully put up lactic acid plants in the country, while a few others have tried and failed. Lactochem Ltd of the Malladi group has a 200 tpa plant in operation. Karnataka-based Munirabad Chemical Co, which has a 180 tpa plant, is another example of a successful plant. Orchem Ltd, an associate unit of Atul Drug House, attempted to put up a 300-tpa plant, but did not succeed. The company first attempted to manufacture the chemical synthetically on a laboratory scale, but ran into difficulties when getting into commercia l scale operations.

Another company called Sangita Bio-Chem of Orissa also attempted a venture, but is said to be held up for want of funds. Two new units are coming up. One is Prathista Industries in Andhra Pradesh, with 1m000 tpa capacity and Interspice Biotech near Chennai. The latter is coming up with technology from GaLactic S.A. of Belgium. The study recommends setting up of a plant of 3,000 tonnes capacity, which would cost around Rs 27 crore. Domestic demand is expected to increase from 560 tonnes at present to 1,980 tonnes in 2011. Global demand is projected to rise from 70,000 tonnes to 181,560 tonnes by 2011. Even if India exports 5,000 tonnes in the year 2011, it would only have a three per cent share of the market. However, the global demand projections are really not clearly predictable because if the use of polylactic acid as a bio degradable plastic catches on, the world demand could shoot over the roof. The Nandini Chemicals study has also said that huge export possibilities exist for other molasses-based products such as lysiene, a nutrient that the human body needs but does not produce, glutamic acid, itaconic acid, gloconic acid, ephedrine hydrochlor ide and yeast. The thrust of the study, whose recommendations are with the Government, is that the chemicals derived from molasses could be produced cost effectively and be profitably exported.