PyroGenesis Advances Toward Commercial Fumed Silica Production with New Joint Venture Agreement
PyroGenesis Inc., a leading provider of ultra-high temperature processes and plasma-based technology solutions for heavy industry and defense sectors, has taken a significant step toward expanding its commercial footprint in specialized materials production. The company announced today the signing of a non-binding memorandum of understanding to establish a joint venture focused on operating a commercial-scale fumed silica production facility.
Details of the Proposed Joint Venture
The memorandum of understanding involves PyroGenesis' client HPQ Silicon Inc., through its wholly owned subsidiary HPQ Silica Polvere Inc., and an undisclosed industrial joint venture partner. The purpose of the collaboration is to create a joint venture company that would own and operate a fumed silica production plant with an annual capacity of 1,000 tonnes.
Under the proposed arrangement, PyroGenesis would build the fumed silica reactor for the plant at a cost of US$20.0 million, which converts to approximately CA$27.3 million. This manufacturing agreement would be exclusive to PyroGenesis, positioning the company as the sole provider of the specialized reactor technology for this venture.
The joint venture partner's identity remains confidential at the client's request for competitive reasons, though the company has confirmed that financing for the system has already been secured and will be provided by this partner.
Strategic Positioning and Next Steps
PyroGenesis has been actively involved in all aspects of the negotiations leading to this memorandum of understanding. The company is currently in the final stages of exercising its previously announced option to acquire a 50% interest in HPQ Silica Polvere Inc., as detailed in a press release dated May 30, 2024.
The memorandum outlines several key elements of the proposed joint venture:
- The fumed silica reactor will have a production capacity of 1,000 tonnes per year at a cost of US$20 million
- The joint venture will purchase the reactor with financing provided by the joint venture partner
- The joint venture will own and operate the system with the goal of selling fumed silica at prevailing market prices
- HPQ Silica Polvere Inc. will receive a royalty for each kilogram of fumed silica sold by the joint venture
- Profit-sharing arrangements between the joint venture partners will be established
- An implied off-take agreement exists between the joint venture partner and the joint venture to justify the venture's creation
Technical Validation and Timeline
Progress toward the joint venture formation depends on confirmation of specific chemical and compositional characteristics of fumed silica powder produced by the existing pilot plant. Samples from the fumed silica reactor have already been produced and delivered to both the client and a specialty testing laboratory in the United States, where verification tests are currently underway.
The proposed commercial plant would represent a scaled-up version of the current pilot facility that PyroGenesis designed, engineered, and constructed. This innovative system converts quartz into fumed silica in a single, environmentally friendly step without chemical additives and without producing hazardous by-products.
"On-site production using our fumed silica reactor plant would represent a significant development for manufacturers that rely on fumed silica," stated Mr. P. Peter Pascali, President and CEO of PyroGenesis. "Localized production at, or near, the point of use fundamentally restructures the supply chain, streamlines logistics, and secures reliable access to material that is critical to manufacturing operations. This is a quickly emerging consideration within global supply chains."
Cautious Optimism and Future Prospects
Pascali emphasized that this memorandum of understanding represents an important first step, but cautioned that the joint venture and production plant projects will only proceed upon successful completion of negotiations and the signing of definitive agreements by all parties. These negotiations are ongoing and are expected to be completed no later than the end of the second quarter of 2026.
If the joint venture proceeds as planned, the plant would be delivered within twelve months of the joint venture's formation. Industry expectations suggest there may be demand for additional fumed silica plants of similar or larger capacity following the successful implementation of this initial facility.
The company notes that there is no certainty that a joint venture will ultimately be formed, or that if formed, it will occur within the expected timeframe or prove commercially viable. The formation of the joint venture remains contingent upon successful negotiation and execution of one or more definitive agreements pertaining to the joint venture and related obligations by all involved parties.
