Plantic gears up for market

Biodegradable packaging manufacturer Plantic Technologies has secured $4.5 million in venture capital and believes it will be in a position to service the Australian market within three months.

The Melbourne company, which was recognised with a technology transfer award at the CRC conference in Sydney this week, has also won the backing of the Victorian government in setting up its manufacturing base in the state.

Managing director David MacInness said that while the company had hoped to have begun producing small amounts of its biodegradable dry packaging by now, the venture capital had not come through until just two days ago.

MacInness would not reveal details of the capital arrangement, saying a formal announcement was pending. He did say, however, that the deal was done through a Sydney venture capital group and that the lead investor was Australian-based.

"We obviously had to hold back on our expansion until after the venture capital was raised," he said. "But this is good for Australia because it will mean decreased imports and increased exports."

The company had initially flagged an off market capital raising of $6 million to begin production of its development pipeline.

"What we have done is to take a preliminary close at $4.5 million, which is more than adequate to make us a very successful, profitable business," MacInness said. "Within a few weeks the additional $1.5 million will be in place."

The company is also considering a public listing in two to three years.

Plantic holds the global licensing rights to the environmentally-friendly technology, which was developed by the Cooperative Research Centre (CRC) for International Food Manufacture and Packaging Science - a joint effort between scientists at the University of Queensland, Melbourne's Swinburne University and the CSIRO.

The product, developed over the past six years at a research and development cost of more than $10 million, is made from the same cornstarch found in high-fibre bread and can be coloured, flavoured, moulded and cut into shape.

While it looks and feels like petrochemical-based plastics, the product dissolves when wet, with special enzymes breaking it down to carbon dioxide and water.

MacInness said major food manufacturers had been crying out for a product that could be disposed of with food scraps, with strong interest expressed by Cadburys, Arnotts and supermarket chains including Coles.

He said that while other biodegradable plastics had been created, Plantic's was the first that was cost competitive with petrochemical based plastics.

As well as dry food packaging the company has a pipeline that includes agricultural film that could withstand a whole growing season then be ploughed into the ground after harvest to break down in less than six weeks.

MacInness said the company had already run initial commercial trials of the product, but was probably still a year away from full-scale manufacture.

The company now plans to consolidate its manufacture and supply of its dry food packaging product within Australia, having reached agreement with the Victorian government to set up a manufacturing plant in Laverton North.

MacInness said he could not yet reveal details as to the extent of assistance given by the state, except to said Plantic had received "a lot of help" from the Victorian government.

"A whole of Australia manufacturing capacity will be in place in two to three months," he said.