Sanimax

Source: Energy Digital

Date :17/09/2007 06:27:52

Relishing its renderings advantage

Sanimax is turning its profitable renderings operations into launching points for a variety of new services, including the first such foray into the bio-diesel market

Written by David Weldon & Produced by Melissa Abbott

The adage “Waste Not, Want Not” has special meaning for Michael Langenhorst, CEO of Sanimax.

Located in Montreal, Quebec, Canada, Sanimax is a family of companies that would generally fall under the umbrella of a renderings operation. But Sanimax is much more.

For those not familiar with the term, renderings are the non-edible parts left over from livestock after they have been slaughtered. According to Langenhorst, that is pretty much just what you would assume — bone, organs, fat, hide, hoofs, blood, etc.

And while one might assume that the bulk of any slaughtered animal is meat, that is not the case.

“In a 1,000 lb. beef slaughter animal, approximately 470 lbs. would be meat, and the other 530 lbs. is renderings,” Langenhorst explains, “or — not the normally edible parts in our society.”

But renderings certainly have other uses, as Sanimax is testimony. Sanimax has been able to create a family of eight separate, but related businesses around renderings, including a unique foray into bio-energy.

The byproducts of animals are used in a number of other products, such as grease, wet pet food products, and spray dry blood products, as well as a number of products requiring fatty acids.

While the industry specifics may not be polite dinner conversation, renderings is very big business — with an estimated 54 billion lbs. produced annually. To put the industry in context, think about how many cuts of meat are sold each year to feed the public, and then realize a slightly larger amount is renderings.

Sanimax is in the top five or six companies in this sector, Langenhorst says, but it is alone in its ability to offer the wide array of services that it does.

“We’re very diversified, and able to handle hides, skin, renderings, restaurant services, and energy services,” Langenhorst says. The company operates its own bio-energy plant, making it the only renderings company to have expanded into this area.

Sanimax is actually a newly former company. It was created in 2006 with the merger of Animax, a premier recycler of food by-products since 1881, and headquartered in Green Bay, Wisconsin; Sanimal, a major Canadian rendering company operating since 1928, and based in Montreal; and bi-pro, a global marketer of premium products and ingredients since 1992, located in Guelph, Ontario.

Renderings were the core businesses of Animax and Sanimal, Langenhorst says. Bi-pro is a service oriented company.

With the merger of the three companies, Sanimax currently has 14 facilities in Eastern Canada and the Midwestern United States. The company has approximately 1,000 total employees at the 14 facilities.

“The majority of our sites are concentrated on just renderings,” Langenhorst says of the 14 locations. “But we’ve expanded operations to add on the finished products, and that is how we have differentiated ourselves.”

To also help differentiate the company, approximately three years ago managers began looking into the bio-energy sector as a possible new market to explore. Langenhorst says the transition into bio-energy was a logical one, since the company was already producing the raw ingredients for fueling a bio-energy facility.

“It made sense for us to use the materials we already had,” Langenhorst says, “and our product is very different from the other products such as soybean oil.”

Sanimax opened its first bio-diesel plant in Deforest, Wis., in April of this year. The plant — which took one year to construct — is tied to a restaurant services plant the company was already operating. At present, the plant is on target for an annual production of 20 million gallons of bio-diesel fuel.

To put that into perspective, Langenhorst says there were 300 million gallons produced industry-wide last year. But with a growing number of companies getting into this space, the total production is expected to reach 700 million by the end of 2007.

Executives at Sanimax already understood the bio-diesel fuel industry, having been involved with the National Biodiesel Board. Langenhorst was a member of that board for two years, and says the experience was excellent preparation for locating and launching a new plant.

The Wisconsin bio-diesel plant can process all traditional raw materials used in bio-energy production, according to Jeremy Goodfellow, Business Unit Leader of Sanimax Energy. That includes soybean oil, all vegetable oils (including corn), all animal fats, and restaurant oils.

But because of rising prices in the soybean market, Goodfellow says Sanimax is uniquely positioned to stave off rising operating costs that many other biodiesel companies can’t. The simple solution is in its renderings materials.

“Last year, the price for soybeans increased by 50 percent because of the new demand for renewable energy, especially in the biodiesel sector” Goodfellow explains.

The biodiesel industry, while still in its infancy in some respects, is becoming a very popular place in the past two years, Langenhorst acknowledges. An increasing number of large companies are investing in the sector. And a growing number of farmers are banding together to form cooperatives that can build their own facilities.

The result of the increased competition will put added pressure on those already operating plants to find efficiencies and differentiators in the market, and that is where Sanimax should do very well, Goodfellow says.

Sanimax will also look for new opportunities to partner with other companies, or research groups, Goodfellow says.

“We have a different portfolio than most companies,” he notes, which puts Sanimax in a strong position to add value to partner and customer needs.

Looking to the future, Langenhorst wants to see the Canadian and U.S. governments play even more active roles in promoting the bio-energy industries. A key role they could play, he says, is with investments in the basic infrastructure needed to build and sustain the industry.

“In the past, there was no infrastructure in place to help customers to utilize the product,” Langenhorst says.

The problem is that bio-diesel production requires access to good truck and rail systems in order to bring raw materials to a plant, and ship the byproducts to customers. Since bio-diesel operations are traditionally built in rural areas, this can make the infrastructure challenges expensive for a new plant developer.

That is not a problem faced by Sanimax, however, since it can easily locate new bio-diesel plants adjacent to its existing operations. That would give any new plants — and Goodfellow confirms that a second plant is being considered — immediate access to infrastructure, the raw materials source, staffing, and in-place expertise.

So no matter how much increased competition enters the bio-energy space, Langenhorst says Sanimax is poised to remain a leader.

“The competition doesn’t drive us,” he says. “We hope to drive the competition.”