Solayzme (SZYM) is not your average oil & gas refiner. The $722.78 million market-cap company is a purveyor of algae-based renewable oils for not only chemicals and fuel, but also for nutritional and cosmetic products.
On Wednesday, Solayzme saw shares adding over 8 percent to hit as high as $11.80, leading the oil & gas refining/marketing sector higher after the announcement that the company had signed a supply deal with one of the leading manufacturers of household products, the Netherlands-based Unilever NV ($UN).
According to the deal, the San Francisco, California-headquartered Solayzme will provide Unilever with 10,000 metric tons of oils for a period beginning at the start of 2014, for a period of 18 months.
According to Solayzme CEO Jonathan Wolfson, the deal demonstrates his company’s ability to be a “reliable, large-scale supplier” of its products. But the news is also a milestone in that it provides a strong argument for the economic viability of the renewable materials industry. While a large swathe of the discussion about renewables has been focused on energy products, the partnership with Unilever, if successful, could turn out to be a flagship moment for the broader use of renewable oils.
Against the backdrop of recent bullishness surrounding the global shale oil and gas boom that has put to bed, for the time being at least, worries about the eventual scarcity of energy resources, this is good news for companies working in renewables. Establishing a revenue stream from other industries such as consumer goods is a prescient move.
Solayzme will produce the oils for Unilever at one of its plants in Brazil, in cooperation with the agricultural company Bunge Ltd. (BG) . the terms of the deal remain undisclosed for the time being.
In midday trading, the $112.5 billion Unilever was down 0.88 percent to $39.25, while the $11.4 billion Bunge was up a slight 0.08 percent to $77.40.