Armed with $4M in fresh funding, Advonex eyes Ottawa expansion

A Kingston-based clean-tech firm is considering building a new manufacturing facility in Ottawa after landing a $4.2 million investment and a major deal with motor oil firm Valvoline.

“We’re going to be growing fairly rapidly in the next year to two years, so what we’re doing is exploring all sorts of opportunities for places where we might be able to install and test a pilot plant, and Ottawa is certainly one of the places where we’re considering it,” says Chad Joshi, the founder and CEO of Advonex International.

His company turns plant and animal fats and oils into lubricants and waxes traditionally derived from crude oil.

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“The world is making a transition to renewable resources,” Mr. Joshi says. “The hard part, really, is the transportation system. That’s where I really see the challenges and the opportunities, and that’s where we’re pushing.”

Increasingly, gasoline is mixed with or replaced by ethanol, while biodiesel is being used more frequently to power trucks and buses.

However, Mr. Joshi says that there is an even greater market for other petroleum-based products such as motor oil and consumer products.

“What we’re doing is the same thing for the rest of the barrel of oil,” he says. “It turns out those other petrochemicals are more valuable than the fuels. Even though the fuels, the gasoline and the diesel, constitute 70 per cent of a barrel of oil, the rest of it is actually worth a lot more.”

His company has been researching and refining its processes. Mr. Joshi says it’s now ready to go to market, and the pilot plant will be the first step.

Advonex announced last week it has received $4.2 million in funding from Sustainable Development Technology Canada, a federally funded foundation that supports the development and commercialization of clean technologies.

That money will help pay for the building of the pilot plant.

The company has also formed partnerships with Minnesota Soybean Processors, which will supply Advonex with soybean oil, and motor-oil maker Valvoline. The Kentucky-based company plans to start making and selling commercial oils and industrial lubricants using the base oil that Advonex will make at its pilot plant.

“What we’ve got is basically the entire value chain covered, from raw materials all the way to finished products,” he says.

While he expects those products to appeal at first to people who are most concerned about the environment, he’s aiming for the mainstream market.

“What Valvoline has done with our base oil is they have demonstrated that they can make a superior lubricating product for automobiles than you can get from petroleum today,” he says. “The challenge with the gasoline and the biodiesel market is you’re basically making something that works exactly the same way but from a different process. What we’re doing is we’re actually giving people a better product.”

He says the plant-based oils reduce friction, improving fuel economy, allowing for more time between oil changes and reducing wear on engines. He expects Valvoline products that use his base oil to start appearing in stores within the next three years.

For Mr. Joshi, that’s just the beginning.

Advonex is also developing cosmetics and personal care products based around plant oils.

“Most cosmetics and personal care products contain lots of materials that come from petroleum,” he says.

He says people often don’t realize that baby oil or the wax in their lipstick, for example, comes from petroleum.

“What we can do is we can give that industry plant-based waxes and mineral oils and other things so that they can become much more sustainable, and that is getting a lot of good response from the cosmetics companies that we’ve been talking to,” he says.

Eventually, he says, his products could help replace the petroleum in plastics and in products such as sealants for wooden decks.

If Mr. Joshi’s plant comes to Ottawa, it could create dozens of jobs, including positions for scientists and engineers. He’s also eyeing putting his business development and sales team in Ottawa.

“Part of the challenge is that as we build up a sales and business development infrastructure, we need to be in a location, or at least that function needs to be in a location, where they have easy access to transportation to get to our customers and to our vendors,” he says.

While Kingston has been a good place to develop his products, he says it doesn’t have the full range of transportation options required by a business that’s looking to grow internationally.

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