LINCOLN, Neb. (DTN) -- Archer Daniels Midland and LG Chem have canceled two joint ventures that included the planned construction of a plant in Decatur, Illinois, which would have produced polylactic acid, and another joint venture that would have used corn to produce lactic acid, the companies announced on Friday.
The companies announced in August 2022 the launching of two joint ventures, including GreenWise Lactic and LG Chem Illinois Biochem.
GreenWise would have included production of up to 150,000 tons of corn-based lactic acid annually. ADM would have been the majority owner of that venture and was to contribute fermentation capacity from its Decatur bioproducts plant to the venture.
In the second venture, LG Chem owned the majority interest and planned to build a new facility that would have used lactic acid from the GreenWise venture to produce about 75,000 tons of polylactic acid per year.
"Since we originally announced our two joint ventures with LG Chem for lactic and polylactic acid in 2022, construction costs have skyrocketed," said Chris Cuddy, president of ADM's carbohydrate solutions business.
"We looked at a variety of options, but when the time came to make final investment decisions, it had become clear that these projects no longer represented a prudent use of our investors' capital that would meet our returns objectives."
Cuddy said in a statement that ADM "remains committed to leading in the decarbonization of the industries" in which the company operates.
"We also are continuing to advance multiple projects and facilities in support of innovation, jobs and economic growth for the Decatur region, the home of our North American headquarters and our largest manufacturing and employee location," he said.
Production at the new plant was originally set to launch in late 2025 or early 2026, according to the companies.
The joint venture offered a potential new corn market for farmers and was expected to create new jobs in the Decatur region.
When the companies originally announced the joint ventures, they pointed to a growing global demand for lactic acid as a reason for the projects.
Lactic acid is used in food, feed and cosmetics, as well as in bioplastics. As of 2021, that market was valued at around $2.9 billion with an expected annual growth rate of about 8%.
Global demand for bioplastics and biopolymers was projected to grow from about $10.7 billion in 2021 to $29.7 billion by 2026, according to the companies.
The companies had announced that they were participating in the state of Illinois' Economic Development for a Growing Economy program, which incentivizes companies to invest in the state's economy.
Todd Neeley can be reached at todd.neeley@dtn.com
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