- PyroGenesis (TSX:PYR) is opting for a 50 per cent stake in HPQ Silicon’s (TSXV:HPQ) subsidiary to advance their fumed silica pilot plant
- PyroGenesis, a specialist in reducing the carbon footprint of heavy industry, gave notice to HPQ to convert its 10 per cent gross sales royalty into a 50 per cent ownership of HPQ Silica Polvere
- The fumed silica reactor, built by PyroGenesis and owned by HPQ, converts quartz into commercial-grade fumed silica in one low-carbon step without the use of harmful chemicals required by conventional methods
- PyroGenesis Canada opened trading at $0.60 per share and HPQ Silicon (TSXV:HPQ) opened trading at $0.23 per share
PyroGenesis (TSX:PYR) is opting for a 50 per cent stake in HPQ Silicon’s (TSXV:HPQ) subsidiary to advance their fumed silica pilot plant.
The Québec plant is part of a project with the green technology stock’s subsidiary, HPQ Silica Polvere Inc., to produce fumed silica for a variety of markets at an initial capacity of 50 tonnes per year (tpy).
PyroGenesis, a specialist in reducing the carbon footprint of heavy industry, gave notice to HPQ to convert its 10 per cent gross sales royalty into a 50 per cent ownership of HPQ Silica Polvere.
The fumed silica reactor, built by PyroGenesis and owned by HPQ, converts quartz (SiO2) into commercial-grade fumed silica in one low-carbon step without the use of harmful chemicals required by conventional methods.
The pilot plant is scheduled to begin operations in Q3 2024 under a batch protocol to replicate lab-scale production of fumed silica with surface areas between 150 and 200 m2/g. Operational optimization will follow, with the goal of achieving food/pharma-grade fumed silica with surface areas exceeding 300 m2/g. The plant will then progress to semi-continuous operations to produce 200 kg of commercial-grade fumed silica, or 199 times the entire lab-scale production, enabling HPQ to send samples to potential clients and secure offtake agreements.
Fumed silica is a powder most often used as a thickening agent, anti-caking agent and stabilizer to improve texture and consistency. It can be found in adhesives, paints, sealants, and batteries, as well as products in personal care, pharmaceuticals, agriculture (food and feed), construction, the powdered food industry and the auto industry. The global fumed silica market was valued at US$1.9 billion in 2023 and is projected to reach US$3.1 billion by 2032.
Fumed silica demand is also expected to add 80,000 tonnes to the market between 2024 and 2029, bringing it to a total of 390,000 tonnes, according to Mordor Intelligence, thanks to its varied uses. This means the world will need approximately 16,000 additional tonnes of capacity per year, paving the way for energy-efficient solutions such as the fumed silica reactor. Should client demand require it, HPQ could switch the plant to full-capacity mode and generate around 161 kg per day, which works out to 50 tpy.
Compared with the low-margin, capital-intensive and emissions-heavy processes in place at the five chemical companies that control the fumed silica market – Evonik Industries, Cabot Corporation, Wacker Chemie, Tokuyama Corporation, and OCI Company – the fumed silica reactor stands out as a key driver towards industry sustainability. Key advantages include:
- The reactor consumes 86 per cent less energy and demands 93 per cent less capital investment compared with traditional methods
- It eliminates the need for chemical treatments to achieve the desired quality
- It has the potential to generate EBITDA margins three times higher than the industry average
An internal HPQ study based on a 1,000-tpy scenario demonstrated the reactor’s potential to generate an EBITDA margin three times higher than the industry average, while requiring only 7 per cent of the investment and 14 per cent of the emissions compared with a conventional fumed silica plant.
“PyroGenesis’ decision to exercise its option early, as we commence the next phase of commercial validation, highlights their strong commitment to our project. This move also mitigates future financing risks and eliminates a prospective obstacle in our ongoing discussions with potential partners in the development of the fumed silica business,” Bernard Tourillon, president, and CEO of HPQ Silicon and HPQ Silica Polvere said in a news release. “After the exercise, PyroGenesis will be both an equity participant and technology provider for the project, and we look forward to this collaboration.”
“With PyroGenesis’ conversion of the HPQ Polvere annual royalty option to an ownership stake, the potential benefit to the Company from HPQ Polvere’s future success is enhanced, and we are very excited about what the future holds for the FSR project – an initiative we believe is a truly innovative approach to producing fumed silica, one of the most in-demand materials,” P. Peter Pascali, PyroGenesis’ president and CEO added. “The technology developed by PyroGenesis for HPQ Polvere is designed to offer significant economic and environmental advantages over conventional manufacturers – improving profitability, but also reducing the environmental footprint and reducing the harmful chemicals associated with traditional fumed silica production. This conversion to an ownership stake also further solidifies the already-strong relationship between HPQ and PyroGenesis, as we move forward with this and other projects together.”
PyroGenesis Canada designs, develops, manufactures and commercializes advanced plasma processes and sustainable solutions to reduce greenhouse gases.
HPQ Silicon is a green technology stock focused on producing the critical materials needed to reach net-zero emissions. The company’s efforts are centred on fumed silica, high-purity silicon, silicon-based anode materials for battery applications, and on-demand hydrogen production.
HPQ Silicon stock (TSXV:HPQ) opened trading at $0.23 per share
PyroGenesis Canada (TSX:PYR) opened trading at $ $0.60 per share.
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(Top photo of HPQ Silicon CEO Bernard Tourillon: HPQ Silicon)