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REFILE-INTERVIEW-Novozymes eyes Chinese biofuel boom
(Refiles to fix apostrophe position in paragraph 1)
By David Stanway
DALIAN, China, Sept 14 (Reuters) - Denmark's Novozymes (NZYMb.CO), the world's biggest industrial enzyme producer, was hit harder than it expected in the financial crisis, but growing biofuel demand in China and elsewhere will underpin future growth, a senior company official said.
Novozymes predicts China's biofuel sector will become a key component of its business as the country looks for ways to wean itself off expensive and insecure foreign oil, Thomas Nagy, the company's executive vice-chairman, said.
"I think biofuel holds a lot of promise for us in China, particularly second-generation biofuels," Nagy said on the sidelines of the World Economic Forum in Dalian.
"If something like 10 percent of the Chinese fuel market could become renewable, then we hope to take a good share of that."
Novozymes, which produces customised enzymes for 40 different industrial sectors, originally expected its 2009 revenues to grow by 8-10 percent, but it has had to revise that to zero to 3 percent, largely as a result of slowing demand.
The decline of the dollar has also hit the company, which reports results in Danish krona.
"We have not been resistant to crisis. Our customers have slowed down and everybody has been destocking," Nagy said. "We have not changed the direction of the company, the ambition of the company or our basic strategy, but we have realised it is a little harder than we expected eight to ten months ago."
During the recent biofuel boom in the United States, Novozymes provided many of the enzymes required to break down corn starch into sugar. But corn biofuel isn't an option for the heavily-populated China, where land and food are at a premium.
China originally planned to meet 15 percent of total gasoline and diesel demand through biofuel by 2020, but experts have cast doubt on the target after the country banned the use of food crops in 2005 amid concerns about scarcity and rising prices.
Novozymes has been working with the state-owned food and agriculture giant, COFCO, on a facility in southwest China's Guangxi region that will produce biofuel from cassava, but the use of agricultural residues -- known as "second-generation" biofuel -- is now regarded as the way forward.
But the chemistry of breaking down the cellulose in waste products like corn stalks and husks is more complex and more expensive.
Novozymes has already set up a joint facility with China's COFCO in Harbin, honing and engineering enzymes capable of breaking down chunks of cellulose into sugar, which is then processed with yeast into alcohol.
China's second biggest oil company, Sinopec, is also getting involved in the project after discussions held this year, and a demonstration plant is expected to be ready by 2011, Nagy said.
It isn't all about biofuel. Novozymes' laboratory in Beijing is capable of analysing thousands of newly discovered enzymes every week, and the company's researchers collect soil, sand and water samples across China in the search for "wild type" microorganisms capable of perfecting industrial processes in the food or textile sectors.
The company already sells more than 600 products in 130 countries, and it also sold genetically engineered microbes to the Beijing government to strengthen grass roots during the Olympic Games last year. (Reporting by David Stanway; Editing by Clarence Fernandez)
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