Category Archives: Chemistry

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.

Hanford B Reactor Designated a National Landmark

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August 25, 2008.  The Department of the Interior along with the Department of Energy has announced that the Hanford B Reactor has been designated as a National Historic Landmark.

A pdf download details the history of area 100-B.  In this document there is a figure that shows how new fuel elements were pushed in one side and how the spent elements came out the other side into a water basin with the aid of the local (and free) gravitational field.

This seems very clever. I fear that a modern solution would involve 10 years of studies and would result in a half billion dollar high tech solution. Contractors would lock on to the DOE tit and hang there for decades with service contracts and spec’d in consumables.

 Hanford Refueling Process

Climbus Maximus

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Th’ Gaussling just received this photo of his good friend Paul on the summit of Mt. Kilimanjaro. This is a real accomplishment and my hat is off to him.  Paul is a tenured perfesser of chemistry and is accustomed to slogging up endless slopes in the rarified air.  We overlap in our fascination with asymmetric lactam enolate alkylations and pyridazine chemistry.

Paul on Top of Africa

Paul on Top of Africa

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.

Lead Couture

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In case any of my dear colleagues in the blogosphere are in the market for a lead brasserie or heavy metal codpiece, there is one supplier of goods meant to protect those delicate regions from radiation. By way of style, I’d put the design in the 19th century Amish or Mormon settler category. But, that is beside the point.  This habillement de mode de plumbum [thanks BabelFish!] is meant to protect the more tender regions from ionization.

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.

 

A Plague of Consultants

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Just like most heaps of dung have an ad hoc ecosystem of insects living on or in it, many companies seem to have a few consultants buzzing around feeding and laying eggs.  These creatures are attracted to the smell of budget allocations, pending or recent disaster, or the need for highly specialized skills on a temporary basis.

Consultants are almost always highly specialized critters, having highly evolved senses and proboscises for the collection of nectar from deep within the treasury organ of the corporate flower.  It is common for consultants to tap into upper level management having budgetary authority.

The infestation stage of their life cycle can begin in many ways.  Consultants are not often seen unless they are in the feeding stage of their lifecycle. When they are looking for a blood meal, they can descend on the unwary manager and dazzle her/him with their flashy appendages.

The infestation can be deleteriously parasitic or genuinely symbiotic. Some consultants plant themselves on an artery and pull blood until the host expires. I will include law firms in this savage group, since lawyers really are a type of consultant. Not all lawyers will draw down the resources of the host to a dangerous level. Many are able to sustain their relationship indefinitely through the exchange of useful services in exchange for a draw of blood now and then.

A company can become infested in many ways. Executives at trade shows are particularly vulnerable to picking up consultants on their legs as they muck around in the fetid swamp waters of business development. It is important for business development managers and executives to check one another for puncture wounds indicating the implantation of consultant larvae.

Consultants find their host organism in many other ways. Business associations, fraternal organizations, and chambers of commerce are known venues for infestation.

Having a consultant glued to your leg isn’t all negative. There is occasional need for their services. The trick to using a consultant profitably is to define the need very carefully and work with them to develop a structured plan so that their work product is well defined. Resist the temptation to turn over the keys to the company while they do their work. It is important to manage consultants very carefully since they are usually quite expensive. If executed properly, consultants can be quite useful as highly skilled temporary specialists.

Thoughts on Organizations

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The management of process development in the chemical indstry is a highly specialized activity requiring skills and experience that crosses many disciplines. Many people doing such work today are practicing in a corporate environment where management structure and support services are already in place. Organization managers have a portfolio of standard operating procedures (SOP’s) and daily operation is a relatively straightforward matter of keeping the ball rolling. Individual work product contributes to a large project where many people and large streams of cash are choreographed to arrive at a well defined goal. Degrees of freedom are frozen out and the dominoes are carefully prealigned to topple to a particular spot.

Process Development Warning: Eventually you may have to shoot the chemist and get on with the project.

(Alright, it’s a joke)

In smaller organizations where individuals have greater personal influence, where money is less certain, and where fewer operational resources may be available, the end state of a technology-push project may be less certain. Choices relating to the details and specification of a product can be changed with greater ease than may be possible in a larger organization with many layers of management.  This is both a benefit and a curse for the small business.

An organization that is not yet ossified with excessive management is one that may have the structural ability to adapt to the business environment with greater ease than one that is “over managed”.  But this is conditional. A small business responding to market pull may have better survivability if it is flexible. A technology push organization that seeks to bring a new product or service to market may actually suffer from too much organizational flexibility.

Smaller organizations have to invent and implement management structure that constrains the dominoes to topple to a defined endpoint. This can be quite difficult for Explorer-Discoverer types to set into action. The key thing for technical people to consider when starting an organization is that placing an organizational person in the founding member group is critical to building management structure from the outset.