BASF invests in Montco’s Renmatix

German chemical giant BASF has invested $30 million in Renmatix Inc., a King of Prussia early-stage company that produces industrial sugars from wood and other nonfood plant materials that can be used to make chemicals, the companies said Tuesday.

Renmatix, also backed by John Doerr of the Silicon Valley venture-capital firm Kleiner, Perkins, Caufield & Byers, moved its headquarters to Montgomery County from Georgia last summer.

The investment by BASF, the world's largest chemical manufacturer based on 2010 revenues, represents a significant vote of confidence for Renmatix. It was part of a $50 million financing round that included additional money from existing and other new investors.

Renmatix's "technology could allow us in the future to broaden our use of renewable raw materials while improving the cost effectiveness of our value chains even further," Josef R. Wunsch, a BASF senior vice president for modeling, formulation research, and technology incubation, said in a news release.

BASF is also exploring the use of algae to produce specialty chemicals with the help of a Colorado company and is collaborating with a Danish company on a fermentation process that produces a chemical used in bio-based plastics and other products.

If Renmatix's technology - called Plantrose - proves to cost effective on a large scale it could help relieve the global pressure on food prices caused by the use of corn and soybeans to produce ethanol and other biofuels.

Mike Hamilton, chief executive of Renmatix, said in an interview that the investment will allow Renmatix to continue its technical development and help the Renmatix build its first commercial plant, which is expected to cost $100 million and be located in the Mid-Atlantic region.

Hamilton said a decision on the plant's location - ideally near a good supply of hardwood - is expected by June.

At a September event in King of Prussia, a Renmatix official said the first commercial plant would likely be located at a customer site.

BASF has one plant in western New York, two in Western Pennsylvania and one in southern Virginia - likely settings for the Renmatix facility, but a BASF spokesman said that no North American BASF plants are being considered for the first large-scale Renmatix plant. BASF has its North American headquarters in Florham Park, N.J.

BASF had $84.7 billion in revenue in 2010, well ahead of second-ranked Dow Chemical Co., according to trade journal ICIS Chemical Business. DuPont Co., which also has been developing ways to produce chemical feedstocks from nonedible plant materials, ranked 10th, with $31.5 billion in sales.

The Renmatix facility in King of Prussia includes corporate offices and laboratories, which are under construction, Hamilton said.