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Algae.Tec entering nutraceutical market
December 17, 2013
lgae.Tec has entered into an exclusive Collaborative Agreement with Nutrition Care Laboratories, based in Melbourne, Victoria, Australia. “A decision has been made to focus, in the short term, upon the growing of high quality, high value, nutraceuticals, with an immediate focus on Chlorella and B-Carotene algae. Other nutraceutical algae products will follow,” said Algae.Tec Chairman Roger Stroud.
This announcement comes in the wake of a Validation Report from Sydney Environmental and Soil Laboratory Pty Ltd – a National Association of Testing Authorities approved company – that confirmed the application and production capability of the Algae.Tec system in an industrial setting. The report, according to Stroud, said the algae yields achieved are of a sufficiently high level to justify the establishment of a new dedicated algae production facility at Nowra, south of Sydney in New South Wales.
To speed up the path to profitability, Algae.Tec has identified the nutraceuticals market to be worth an estimated $205 billion by 2017 (according to market forecasters, Transparency Market Research) as a significant opportunity that offers:
- Relatively low capital establishment costs
- Potential for high gross margins on revenue
- Significant and growing market in Asia in particular
As part of this strategic opportunity, Algae.Tec has teamed with Nutrition Care, a manufacturer and marketer of high value nutraceuticals for many of the best known nutraceutical brands in Australia and internationally, with a focus on Asian markets in particular.
Initial efforts for the companies will focus on Chlorella, which they agree is an increasingly attractive high protein, nutritional food source, and is highly sought after in Asia; and B-Carotene, which is in demand as a nutritional supplement for vision, immunity and overall health.
Wholesale prices for the Chlorella and B-Carotene are currently $16,000 and up to $90,000 per ton, respectively, according to Algae.TEC. A healthy gross margin on revenue is anticipated as capital costs are expected to be in the vicinity of $7,000 per ton.
Production of Chlorella, and B-Carotene, is expected by the companies to be 2,000 tons in 2014, 4,000 tons in 2015, 8,000 tons in 2016, and 10,000 tons by 2017.
Algae.Tec has entered into a long-term lease at an industrial warehouse complex in Nowra. This, they say, will facilitate a rapid start up of production. Sources of capital are expected to be equity, tax rebates and internal cash flow.