Category Archives: Business

Destroying Munitions with Solvated Electrons

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Blundering through the patent literature I took a wrong turn and tripped over a patent that claims an interesting use of ammonia solutions of electrons. The patent, US 6080907, is assigned to Teledyne Commodore and teaches a method that uses ammonia as a fluid metal cutting medium for the safe destruction of bombs and the explosives inside. The inventor claims that ammonia is superior to water as a cutting fluid. Apparently Teledyne employs a few chemists because it dawned on someone that ammonia will also dissolve certain metals and provide a means of conveyance for a reducing agent to enter the bomb casing and reduce the nitro groups on the explosives. It is a clever idea. A new use for the Birch reduction.

 I wonder if it is in operation?

The Chemical Entrepreneur. Part 2.

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There are many reasons not to start a business. It’s risky. It inevitably requires many long hours sweating all of the ten thousand details. Building a company from scratch requires wildly diverse skills that are not commonly possessed by a single person. And it usually requires more resources than a typical wage earner can easily muster.

A chemical entrepreneur with an eye on manufacturing faces some unique challenges that, say, a fledgling purveyor of roasted coffee beans could avoid. Most obvious it the issue of a physical plant. Not only must the chemist or engineer have a workable chemical process, but also have a highly specialized facility in which to do the processing. This requires suitably zoned land, local review boards, environmental permits, a local work force, process equipment, a minimum of raw material inventory, and buildings to contain it all.

Then the entrepreneur must provide an infrastructure of chillers, boilers, electrical distribution, liquid nitrogen for inert gas, an analytical facility, an R&D facility, quality control, as well as administration, sales, and technical staff.  There must be a steady stream of cash flow to provide a steady payroll. Taxes must be estimated and paid in advance.

There are many sobering reasons not to go forward with a chemical business plan if one is risk averse or, shall we say, comfortable. Indeed, one of the common character traits of people who are analytically-minded is the tendancy to rattle off all of the reasons why something won’t work. We’ve all experienced this in meetings. A problem arises and meetings are called. After the problem is identified, much of the remaining time is spent in a recital of the additional problems that are expected. Soon, the problem mushrooms into a phantasm with imaginary components of awesome magnitude.

We’re all good at digging up reasons why something won’t work. And chemists suffer no lack of ability here.

But this is where the true entrepreneur stands out from the herd. One mark of a successful entrepreneur is the ability to ignore, or filter out, pessimistic predictions of an outcome. There is a spark within the some people that compels them to go forward. Sometimes it is a special insight. But just as likely the entrepreneur has an inner drive- some might unflatteringly call it “narcissism”- that moves them forward because they are certain of the outcome. It is not uncommon for an entrepreneur to consider him or herself the smartest person in the room.

In Part 3 we’ll look at examples of what kinds of businesses chemical entrepreneurs have started.

The Chemical Entrepreneur. Part 1.

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The modern mythos of 20th century American industry includes many stories of businesses being founded in a garage. As the stories go, a few plucky founders will construct a widget in their garage and, with prototype in hand, look for a way to get the product to customers. Famously, Apple computer and Hewlett Packard were founded in this manner.

What you don’t often hear about is the extent to which the founders might have performed a market study to ascertain the potential demand in the market. Possibly because the frequency of this ground work is near zero. Certainly the founders had some sense that like-minded folk would want copies of their products. In other words, if you build it, at least a few will come.

Similarly, one doesn’t hear so much about the rate of failure either. How many storage lockers are crammed with the remains of a failed business plan?  Probably more than a few.

What every technological entrepreneur eventually has to come to grips with is this- who are the customers and how can you get the message of new capability to them? Seth Godin has some interesting ideas about this. Godin suggests that in todays information saturated market place, the critical customers are the innovators and the early adopters.

So here is the big question- Why don’t we hear more about chemists launching businesses out of a garage?  Better yet, how might the chemical industry be different if more chemists did start a chemical business in this celebrated manner?  Most might agree that the culture of entrepreurialism that Wozniak, Jobs, Packard, Hewlett, and Gates picked up and ran with dramatically accelerated the growth of the electronics industry. But fewer might agree on what clues these founders took as their cue to risk everything. How does a fledgeling chemical entrepreneur know if the idea, process, or material of interest is worthy of risking the family nest egg?

On the next posting, we’ll talk about some of the factors that a chemical entrepreneur might face in getting started.

BASF Launches Organozinc Product Line

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Eurogiant BASF recently announced the launch of their new organozinc halide capability. BASF is offering a portfolio of organozinc halide reagents on the strength of a licensing agreement with Rieke Metals of Lincoln, Nebraska. The value proposition that BASF is pushing is the compatibility of organozinc species with functional groups that are normally incompatible with organolithium or organomagnesium reagents. Likewise, the zinc reagents will undergo a variety of coupling and Michael-type reactions, though apparently with additives.

It is interesting to speculate as to the basis of the license. Does Rieke have a proprietary process to license? Is it based upon trade secrecy or a patent? Certainly Rieke Metals has considerable expertise with organozinc chemistry plus a grip on its trademarked Rieke ®Zinc. 

A perusal of the patent literature comes up with only one patent application by Rieke Metals as the assignee. However, Prof Rieke has been patenting for the University of Nebraska and obtained fifteen patents as of this date. The most recent patent is US 5,964,919 issued Oct. 12, 1999.  A number of them could contain the value that BASF would require to step into this venture.

Of interest is US patent 6,603,034 issued to “Consortium fr Elektrochemische Industrie GmbH” for “A process for preparing organozinc halides in a solvent, comprising reacting a reactive halogen compound with zinc in at least one carboxylic ester, to produce a solution.”  Hmmm.

I’m a distant admirer of Rieke Metals. I respect how they have grown into their niche and have remained focused on the prize. I hope the venture goes well for all concerned.

The Speedy Speedo

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A detailed description of the swim suits worn by the US Olympic Team can be found in the US patent application by Speedo International, US 2008/0141431.  These sophisticated garments are multilayer, multipanel affairs that the inventors claim will reduce surface and form drag in the water. According to section [0066] of the description, the stretch constant of a given panel can be defined by the manufacturer so as to provide more or less compression to a particular part of the torso.

Down Gauging Plastic Films

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The world of commodity goods and services may seem static to outside observers, but behind the curtain there is almost always a seething churn of battles occuring between competitors and with vendors. In the high volume, low margin world of commodity polymer manufacture, the price of resin (or “plastic”) feedstocks is subject to the variability of the global hydrocarbon market.  The market determines your price and your costs. The trick is to avoid getting squeezed when unit costs and prices converge.

In the resin film and injection molding business, the ability to raise prices is constrained by the complex relationship between the manufacturer of polymer resins and the buying side of the market. The relationship between thermoplastic polymer (i.e., PE, PP, PS) manufacturers and the end user is not always direct. 

The actual manufacturers of thermoplastic polymers produce their resin product in the form of squat little beads. There are several reasons for this. Beads are what you get when you cut extruded spaghetti noodles from the output side of the polymer reactor. This cutting process happens in a stream of water to remove process heat. The water rapidly cools the resin and prevents the beads from agglomerating. It also provides a means of conveyance to move the beads elsewhere in the processing facility.

The beads are removed from the water and subsequently moved to silos by pneumatic conveyance.  Beads have the happy property of flowability. You can pour beads into a properly designed hopper and they will flow by gravity into a rail car or an extruder.

There is an intermediary customer called the converter. The converter buys resin beads from a manufacturer or distributor and converts them into higher value forms. Converters make films and injection molded items from these resin beads. Converters practice a high art. Some of their products, like films, may be pure resin.  But a great many other products in the injection molding arena are highly modified with additives that provide desired attributes in the molding process itself or in the finished good. Additives are the output of a highly specialized industry.

Because the polymer market is very competitive, it is difficult for any given producer or converter to simply raise their prices. One of the tricks of the trade is something called “down gauging”.  It is simple to understand. To improve manufacturing economics, converters will make their films thinner (in resonse to marketers of films) so as to make more sq meters of film with the same material input. The reader may have noticed that over time, plastic bags or wrappers have gotten much thinner. This is the result of down gauging.

Converters have to face material limitations in their resin feedstocks. For films, melt strength is one of the key parameters in processability and a big selling point for manufacturers of resin feedstocks. When you make a blown polymer film, your are actually extruding molten resin through an annular die to form a cylindrical bubble. The bubble rapidly cools to form a continuous tube of film that is then rolled as is, or slit to form a continuous sheet. This is a very common technique for making commodity films. If the molten bubble is not strong enough to withstand the effects of gravity and processing forces, it will collapse and fail.

One of the improvements to come along beginning in the early 1990’s is the availability of metallocene polymers, specifically mPE.  This technology provides for greater control over the molecular structure of the polymer and subsequently, greater control of the rheology of polymer melts. Improvements in melt strength can lead to greater processing controllability for the converter and more options in gauge.

If you want to understand the PE and PP industry, you have to understand the relationship between resin manufacturers and converters. While converters do not drive the boat exclusively, they do have a large input into which direction the boat is pointed.

Zambian Copper Mine to Boost Output

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Zambia’s largest mining operation, Konkola Copper Mines plc (KCM), is nearly ready to commission the Konkola Deep Mining Project.  This mine expansion project, in combination with the new Nchanga Smelter, will increase the mine’s output from 200,000 tonnes per year to 500,000 tonnes per year by 2010. 

In order to enable the increase in ore output, a new shaft was sunk. The new production shaft # 4 reaches to 1,490 meters below the surface and will service production levels at 1050, 1150, 1250, and 1350 meters depth.  The company anticipates returning 40 % of the tailings back underground for remediation purposes.

The Konkola underground mine is known as the wettest mine in the world. The mine must be continuously pumped to remove the copious water seepage.  Underground improvements will increase the “water make” from 290,000 cubic meters of water to 430,000 cubic meters of water per day.  The water pumps are expected to draw 90 MW of continuous power to do their job.

KCM has invested US$12 million in new sulfuric acid capacity at Chingola. This sulfur burning plant will produce 500 tonnes per day of sulfuric acid for use in the Nchanga Tailings Leach Plant.

KCM also operates an open pit mine nearby.

PGM Prices Tumble During Summer of 2008

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22 August, 2008.  It is a remarkable collapse in pricing. Rhodium has fallen from a high of US$10,100/toz (toz = troy ounce) in early June of 2008 to opening price of US$3950/toz on 21 August, 2008, on the EIB.  Bad news from automotive manufacturers General Motors, BMW, and Nissan is cited by Reuters and posted on Mineweb as the principle cause of the collapse. According to Reuters, the automotive industry accounts for 80 % of the demand for rhodium. 

Other reasons are cited as contributing to the price fall.  Electrical distribution problems interrupting mine activities has reportedly eased, reducing the jitteryness of buyers.

The rhodium market is small and illiquid, and few traders are prepared to speculate on a floor for prices.

The metal’s recent price falls have been blamed by some traders on forward selling, or hedging, by producers. If this is the case, the market should stabilise as these sales tail off.

Mineweb, 15 August, 2008

Ruthenium prices have been sitting at US$300/toz for months now. Apparently the news that sparked the major uptick in Ru prices last year has failed to produce real demand.

Gold opened on the EIB yesterday at US$835.57/toz. This is down considerably from mid July, no doubt adding some tarnish to the spate of ads urging consumers to buy gold.

Palladium has fallen to US$295/toz from the recent high of US$480/toz in mid June of ’08. This is good news for the chemical industry and chemical researchers.

Finally, Platinum has seen a price decline as well, opening at US$1465/toz against the Feb ’08 high of US$2275/toz. This is also good news for the chemical industry. Hopefully chemical buyers are in a position to hedge their PGM positions a bit.

 

Self-Imposed Complexity and the Ratchet Principle

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The portfolio of laws that American citizens are subject to seems to grow without bounds. Every year our congress drafts a new collection of laws to submit to the process of enactment. State legislatures, county and city governments all are able to add new rules and constraints on our degrees of freedom. As if that weren’t enough, people willingly move into convenant controlled communities where they sign away basic freedoms like the freedom to choose house paint or to leave the garage door open.

We are gradually fencing in all of the free space where conduct is unregulated. Our Nanny State leaders are scaring the bejeebers out of us through defense initiatives and dire warnings about what could happen if terrorists took an interest in disrupting industry and infrastructure.

Our town of 6,000 has to comply with Homeland Security requirements by fencing in the town water tank in a certain way.  Some terrorist could poison the water. In fact, that fiend would probably be a psychotic local citizen bent on retribution, not a Shiite saboteur in sandals. Collectively, we are at much more risk from fellow citizens than from foreign bad guys. Perhaps that is the hidden agenda.

Citizens are turning over priceless freedom artifacts in exchange for promissory notes claiming to protect the bearer. Once we give up degrees of freedom in the conduct of our lives, we can never get them back. Govennment will not refund units of control.  As we increase the complexity of our world through an ever increasing statutory web of control, we forfeit degrees of freedom. It is like a ratchet. You can click forward, but there is no going back.

New subject. Read Jim Kunstlers post “Reality Bites“.

Bacevich on Consumerism and the Imperial Presidency

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While I have been struggling in my usual caveman way to express my frustrations with our national governance, whom should I stumble into but Andrew J. Bacevich, Boston Univ professor of history and international relations, who has been working on this matter for some time. Bacevich has written a book called The Limits of Power: The End of American Exceptionalism.  This exceptionally articulate fellow was recently interviewed by Bill Moyers on public television. 

His thesis comes down to the notion that American demand for consumer goods and credit has resulted in a kind of consumer imperialism. To facilitate this “domestic disfunction” or “crisis of profligacy”, the executive branch has acquired an excessive reach that exists only by the wither and atrophy of congress. By fiat of the executive, and the mumbling consent of a passive congress, our military adventures have distracted Americans from an examination of our continuous and undisclipined consumerism and indebtedness.