DSM issued a press release to announce its enzyme cocktail for cellulosic ethanol production has been qualified by DONG Energy – Inbicon at the latter’s 1.5m gallon cellulosic ethanol demonstration plant in Kalundborg (Denmark), which is the largest cellulosic ethanol biorefinery in operation.
DSM claims that its enzyme cocktail has proven to have a very high thermal stability, which allows to operate the hydrolysis step at high temperature, thereby decreasing the risk of product loss and increase process speed. DSM claims that the yield obtained was similar to the one obtained in pilot scale.
Today’s announcement is not a major commercial breakthrough for DSM’s 2G biofuels offering (including both enzyme and yeast cocktails), but represents another positive endorsement of the company’s technology position, in our opinion. For the real commercial breakthrough of the 2G biofuels technology we might have to wait until the company’s JV with US-based ethanol producer POET puts its first industrial scale cellulosic ethanol plant into operation (2H13). We stick to our BUY rating and € 52 target price and continue to like DSM for the perceived resilience of its Nutrition operations as well as attractive valuation.