Cargill Inc. will increase its reach in bio-alternatives to oil-based plastics with the purchase of the Blooming Prairie-based business unit of the French chemical company Arkema SA.
Cargill, based in Minnetonka, will spend about $38.8 million on Arkema's epoxides business, which turns soybean oil into a plasticizer that's used in a variety of household goods.
For Cargill, the deal is the latest addition to its three-year-old bioindustrial business segment, which looks for ways to use plant oils to replace fossil fuels.
"Industrial customers are increasingly searching for solutions made without petrochemicals, especially in consumer applications where potential concerns around toxicity and sustainability continue to grow," Kurtis Miller, managing director in Cargill's bioindustrial unit, said in a statement Monday.
In June, for instance, Cargill entered into a joint venture with a German company to use corn as a substitute in a polymer that goes into products as varied as paper cups and athletic wear. And in August, Cargill said it would join with Thailand's PTT Global Chemical to build a biopolymer factory in Thailand for around $600 million.
Cargill said it will retain the 45 workers at the Arkema plant in Blooming Prairie, which is about 75 miles south of the Twin Cities.
Workers at the plant combine soybean oil and other vegetable oils with hydrogen peroxide, creating a specialty oil known as an epoxide. From that, Cargill will then make bio-based plasticizers and polyols that can be used in products ranging from the liner of shower curtains to foam in furniture.
Already a leading purchaser and processor of soybeans, Cargill executives said that, with the Arkema business, the company gains more control of the production chain for bio-alternatives. They expect Cargill to eventually offer a broader range of bio-alternative products to customers, chiefly in the plastics, automotive, medical, furniture and flooring industries.
"Adding this capability will allow us to innovate across the polyol value chain, transforming our vegetable oil into highly functional compounds that bring benefits like flexibility, durability and heat stability to a wide range of industrial products," Miller said.
The deal is one of several recently by Arkema to reposition itself on core businesses in adhesives and acrylics. The companies said they expect to close the deal by the end of the year.