1. Corn Stalks As A Revenue Source Why and How? Don McCabe Ontario Federation of Agriculture Blue Water Corridor Conference A Bi-National Approach to Innovation and Collaboration Bi-National Clusters: Focus on Bio-industrial Innovation June 11, 2014 Sarnia

2. Definition of a Farmer Cash crop Corn, soybeans, wheat farmer Beef farmer Fruit and vegetable producer Egg producer Pineapple plantation Or……..

3. Definition of a Farmer Manager of carbon and nitrogen cycles with input from the water cycle to produce starch, oil, protein, fuel, fiber and energy for world wide consumers at the highest quality.

4. The Canadian Biosphere

5. What Saved Mankind? Introduction of Technology Average Corn Yields / % of GMO Corn

6. Everything in this slide has a price point to market Combine and Head (AGCO) Corn (CBOT) Stalks and Cobs (Value chain cooperative or commodity pricing?)

7. http://www.biobased- society.eu/2013/02/respe ctful-treatment-of-the- complexity-of-biomass/

10. End User Primary Chemicals Manufacturing & Assembly Finished Products Refiner Fossil-based Feedstock Polymers & Chemicals Bio-based Feedstock Processed Biomass Biomass can be integrated sustainably into the existing fossil-based Chemistry Value Chain Bio-based Feedstocks -can be blended into current refinery products as biofuels (eg. ethanol) -can replace existing primary chemicals for the production of polymers and higher value added chemicals Processed Biomass -can be used in finished products that are used in manufacturing and assembly

13. Amount of Sustainably Harvestable Ag Residue in 4 County Area Amount of Sustainably Harvestable Wheat Straw(dry tonnes) Amount of Sustainably Harvestable Corn Stover (dry tonnes)

14. Assumptions For the Cellulosic Sugar Plant 250,000 tonnes/yr of corn stover 115,000 tonnes of sugar produced with 90,000 tonnes/yr of lignin Capital cost of the plant = $70 Million (1/2 financed over 10 years)

15. Supply Co-op: Direct Sale Pricing Option Corn Stover Cost Estimates ($/dry tonne ) Grain corn yield165 bu/ac Stover moisture30% Stover removal rate30% Stover removed0.88 dry tonnes/ac 8x4x3 foot bale weight371 kg Harvest costs$/dry tonne Discbine/stalk chop20.45 Rake9.09 Large square baling43.14 Stack end of field5.39 Storage end of field8.00 Nutrient replacement11.57 Production management issues (15%)14.65 Transportation 75 km15.97 Administration1.00 Stover cost sub-total129.27 Stover sold at FULL cost to the sugar company

16. Financial Model for Corn Stover Supply Co-op General ParametersValue Plant biomass capacity (tonnes/year)250,000 Unit capacity cost ($/tonne/year)$280.00 Debt to equity ratio1.00 Interest rate (%)5.00% Loan repayment period (years)10.00 Price of cellulosic sugar ($/tonne)$400.00 Price of lignin co-products ($/tonne)$40.00 Cost of corn stover ($/dry tonne ) $129.27 Production and RevenueValue Cellulosic sugar production (tonnes/year)115,000 Lignin production (tonnes/year)90,000 Cellulosic sugar revenue (M $/yr)$46.00 Lignin revenue (M $/yr)$3.60 Total revenue (M $/yr)$49.60 Cost ItemsValue Operating costs Corn stover cost (M $/yr)$32.32 Operating costs (M $/yr)$10.00 Financing costs Total capital cost (M $)$70.00 Initial loan (M $)$35.00 Initial equity (M $)$35.00 Interest (M $/yr)$1.03 Loan repayment (M $/yr)$3.50 Sub-total financing costs (M $/yr)$4.53 Net income (M $/yr)$2.75 Income tax (M $/yr)$1.25 Return on equity (%)4.29%

17. Effect of Grain Corn Yield on ROE and Cost of Stover in a Supply Co-op

18. Sensitivity Analysis: Corn Stover Supply Chain Costs (From Glenn Farris AGCO) Top 4 highest supply chain cost influencer related to baling operation 10 out of 15 top supply chain cost influencers related to feedstock supply operations (i.e., Production-specific parameters) decrease by ~$22/std. Mg increase by ~$29/std. Mg Bale density alone can decrease supply chain cost by ~$8/std. Mg Bale density alone can increase supply chain cost by ~$9/std. Mg

19. Effect of Harvest Activities on ROE and Cost of Stover in a Supply Co-op

20. Stover Supply Compared to a Bioprocessing Co-op The Bioprocessing Co-op now sets the ROI at 15% Calculations are done now to maintain producer/investor ROI The price paid for stover is now calculated out to meet the ROI

21. Financial Model for Bioprocessing Co-op General ParametersValue Plant biomass capacity (tonnes/year)250,000 Unit capacity cost ($/tonne/year)$280.00 Debt to equity ratio1.00 Interest rate (%)5.00% Loan repayment period (years)10.00 Price of cellulosic sugar ($/tonne)$400.00 Price of lignin coproductsproducts ($/tonne)$40.00 Cost of corn stover ($/tonne)$110.52 Production and RevenueValue Cellulosic sugar production (tonnes/year)115,000 Lignin coproduct production (tonnes/year)90,000 Cellulosic sugar revenue ($ million/year)$46.00 Lingin revenue ($ million/year)$3.60 Total revenue ($ million/year)$49.60 Cost ItemsValue Operating costs Corn stover cost (M $/yr)$27.63 Operating costs (M $/yr)$10.00 Financing costs Total capital cost (M $)$70.00 Initial loan (M $)$35.00 Initial equity (M $)$35.00 Interest (M $/year)$1.03 Loan repayment (M $/yr)$3.50 Sub-total financing costs (M $/yr)$4.53 Net income (M $/yr)$7.44 Income tax (M $/yr)$2.19 Return on equity (%)15.00 %

22. Effect of Sugar Price on Cost of Stover in a Bioprocessing Co-op

23. Effect of Sugar Yield on Cost of Stover in a Bioprocessing Co-op

24. 80% of Ontario soybeans and corn within 200km Can we do it? Can we do it? Sarnia BioHybrid Cluster Bio/Renewable Based BioAmber Cargill Enbridge Greenfield Ethanol Methes Energy KmX Solutions4CO2 Suncor Ethanol Woodland Biofuels Fossil Based Air Products BP Energy CF Industries DuPont Ethyl Corporation Exxon-Mobil LANXESS NOVA Chemicals Ontario Power Generation Pembina Praxair Royal Dutch Shell Styrolution Suncor Energy TransAlta Energy 24 Sandy Marshall "Based on the first term of funding it is evident that BIC is becoming an organization that will create a legacy for Canada in the bioindustrial and bioinnovation sectors." Mayor Mike Bradley Sarnia, Ontario

25. Development of a Business Case for a Cornstalks to Bioprocessing Venture Agronomic benefits possible with corn stover removal Model of bioprocessing co-op helps to derisk project Need for a cellulosic sugar mill http://www.ofa.on.ca/uploads/userfiles/ files/cornstalkreport-final.pdf

26. Summary The opportunity is here Companies are looking at Ontario Sugar from biomass is a new commodity and investment opportunity Supply to logistics means numerous regional locations will be needed with local economic impact http://www.ofa.on.ca/uploads/userfiles /files/cornstalkreport-final.pdf

27. When Will We Reach Our Potential?