AM Green plans $1 billion biofuels foray, to buy 50% stake in Assam Bio Refinery from Fortum Oyj and Chempolis Oy

The company also plans to acquire 50% stake in Assam Bio Refinery Pvt. Ltd from Finnish companies Fortum Oyj and Chempolis Oy, two people aware of the development said. Oil India Ltd subsidiary Numaligarh Refinery Ltd (NRL) holds 50% in Assam Bio Refinery, while Fortum and Chempolis hold around 40% and 10% respectively. Alongside, AM Green also plans to acquire the Ouli, Finland-headquartered Chempolis Oy—a biotechnology firm—in which Fortum a Finnish state-run power utility, holds a stake.

AM Green, set up by Mahesh Kolli and Anil Kumar Chalamalasetty who founded the Greenko Group, has already signed the exclusivity agreements for the above-mentioned transactions, the people cited above said on the condition of anonymity.

“The exclusivity agreements for acquiring Fortum Oyj and Chempolis Oy's stake in Assam Bio Refinery Pvt. Ltd, and also Chempolis Oy has been inked by AM Green. AM Green plans to expand in this space and in addition to Assam Bio Refinery, set up two more such plants in the country," one of the two people cited above said.

Bio ethanol from bamboo

AM Green plans to manufacture so-called second-generation or 2G biofuels, produced from non-food biomass such as plant materials and animal waste. First-generation biofuels are produced from sugar, starch, corn, wheat and broken rice, and 3G biofuel comes from micro-organisms such as bacteria and algae. The Assam JV will use 300,000 tons of bamboo every year to produce 50,000 tons of bioethanol, 19,000 tons of organic compound furfural, 11,000 tons of acetic acid, and 144 gigawatt hours of green energy.

Chempolis is also the licensor of the 2G biofuel technology for the world’s first such plant producing cellulosic ethanol and bio-based chemicals from bamboo. Investors in Chempolis include Finnish investment and asset management group Taaleri Plc.

AM Green President Mahesh Kolli and Fortum India president Sanjay Aggarwal declined comment.

A Fortum Oyj spokesperson in an emailed response said, “As a stock listed company, we do not comment any market rumours or speculations."

Broadening presence

“In August 2023, Fortum announced that it would assess strategic options, including potential divestments, of its Circular Solutions businesses. The businesses comprise the operating, maintaining and developing of Fortum’s recycling and waste assets, the battery recycling business as well as turbine and generator services and biobased solutions. Chempolis is part of the biobased solutions," the Fortum Oyj spokesperson said in the email. “As there are various businesses within, the scope there might be different outcomes for different businesses. There is no certainty whether the assessment will result in any transactions and Fortum will inform the market, if and when appropriate."

An NRL spokesperson in an emailed response said, “please note that we have no views to share on the development."

Queries emailed to the spokespersons of AM Green, Chempolis Oy, and Taaleri Plc on Thursday evening remained unanswered till press time.

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AM Green plans to be present across green hydrogen, green ammonia, biofuels, e-methanol, sustainable aviation fuels and downstream high-value chemicals, in the backdrop of significant interest in India’s green energy transition play.

Gentari Sdn Bhd, a unit of Malaysia’s state-run oil and gas company Petronas that has been actively eyeing green energy opportunities in India, plans to invest $1.5 billion for a 30% stake in AM Green Ammonia Holdings, a unit of AM Green that will produce 5 million tonnes per annum (mtpa) of green ammonia, equivalent to about 1 mtpa of green hydrogen. AM Green has also inked a term sheet with the world’s largest trader and distributor of ammonia Yara Clean Ammonia for supplies from its green ammonia plant in Kakinada in Andhra Pradesh.

Ambitious road map

India has an ambitious biofuel roadmap under its national biofuel policy with an official target to achieve 20% ethanol blending in petrol by 2025-26. The initial deadline to achieve 20% blending was 2030, with the target of petrol supplies with 10% ethanol blending achieved in June last year. There is a growing traction for biofuels, with the global ethanol market valued at $99.06 billion in 2022 and predicted to grow at a CAGR of 5.1% to reach $162.12 billion by 2032.

Last week, Fortum said it plans to sell its recycling and waste business to Summa Equity through its portfolio company NG Group in a euro 800 million deal. “The divestment of the recycling and waste business is part of Fortum’s strategic review of its Circular Solutions businesses. The strategic review was initiated in August 2023. Fortum’s strategic focus is on delivering clean energy and driving decarbonisation of industries in the Nordics. Fortum’s core operations are located in the Nordics and consist of CO2-free power generation, electricity sales, and district heating and cooling. The Circular Solutions businesses are not in the core of the strategy," Fortum said on 18 July.