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Kafus Launches “Natural” Solution To World’s Oily Waste Water Environmental Problem

Posted on April 18, 2000

By Kafus Industries Ltd.

Boston, Massachusetts — Each year up to 140,000 tons of kenaf core could be used to separate oil from water and then reclaimed as biomass fuel with BTU value equal to coal.

  • World oil refineries generate approximately 16 million gallons of oily wastewater per day and spend approximately $0.25 – $1.00 or more per gallon for disposal.
  • Kafus expects to generate significant service revenues with major cost savings to industries by cleansing oily water for recycled usage.
  • Kafus has potential to become a major producer of biomass fuel through reclamation of “dirty” fiber using patented process.

Kafus Industries Ltd. today announced that its subsidiary, Kenaf Industries of South Texas (“KIST”), has acquired an 85% interest in a newly formed business unit, Kenaf Biocatalytic Services (“KBS”). KIST is North America’s leading grower and processor of kenaf, an annual hibiscus fiber crop that can be utilized in a wide range of Kafus sustainable industries including paper products and natural fiber composites. The kenaf plant contains 2 distinct fibers, the long outer bast bark and short balsa like core.

KBS expects to generate significant revenues from service fees through the provision of its patented process and specially designed equipment to oil refineries and the sale of kenaf core. Additionally, KBS expects to develop revenues from the sale of the resulting reclaimed biomass fuel. KBS has the ability to generate cash flow without the large capital costs and long lead times currently associated with other Kafus industrial developments.

Kafus through KBS owns the patent rights to a process and associated equipment that utilizes “powdered” kenaf core (or cellulose) to cleanse oily wastewater streams generated by oil refineries and other industrial generators of oil/water effluent. The absorbent qualities of kenaf combined with the KBS patented process permit the absorption of hydrocarbons from oil/water emulsions. This allows existing water treatment facilities to substantially improve treatment results while saving millions of dollars in waste disposal charges. Once dry, the remaining oil-soaked kenaf fiber becomes a biomass fuel, a solid with a BTU value that rivals coal. KBS expects to retain and sell this sustainably derived fuel at a discount to the price of coal.

The cleansing and dispensing of oily wastewater mixtures are a common industrial and environmental problem, particularly within, but not limited to, petroleum refining. The U.S. Environmental Protection Agency often classifies these mixtures as hazardous waste, which must be disposed of in special landfills. There are approximately 756 oil refineries in the world with total crude oil throughput of over 81 million barrels per day which are believed to generate nearly 16 million gallons of oily wastewater per day. The U.S. and Mexico constitute over 20% of the worldwide refineries (160) and process over 18 million barrels of crude per day. These 160 refineries are believed to generate over 3 million gallons of oily wastewater daily.

The KBS separation/absorption process eliminates the need for costly off-site disposal resulting in significant savings to the refineries, etc. KBS recently completed an extensive series of tests of its process at two petroleum refineries using a prototype processing unit with excellent results and now expects wide adoption of its proprietary technique by industry.

KIST will be the supplier of high quality kenaf core to the KBS clients. For example, it could take more than 140,000 tons of kenaf core to meet the annual needs of USA and Mexican oil refineries. Kafus has developed a way to utilize farmers to help clean up industry in a way that benefits all parties and protects the environment.

The minority partners in KBS are the original patent owners, Eric Tiemeyer and Arvid Orbeck. Mr. Tiemeyer, who will become Vice President of Technology Development for KBS has been formerly employed by Texas Industries, Pennzoil, and Valero (a leading refiner in Texas) as an environmental engineer and holds a B.Sc. degree in Environmental Engineering Technology from Kansas State University.

KIST currently is growing about 7,500 acres of kenaf for use in several applications, including the sale of bast fiber for use by an affiliate, Kafus Indiana Bio-Composites, Inc. which uses kenaf and hemp to manufacture proprietary Flexform® natural fiber mats. The Flexform® mats are primarily use in the manufacture of automotive interior trim components that are stronger, lighter, lower the emissions of toxic VOC’s, reduce molding time, and can be recycled. Kafus’ Indiana facility is expected to triple production in 2001. Kafus is now expanding Flexform® use into other key industries such as aeronautical, furniture, packaging systems, and recreational vehicles. Kafus Bio-Composites’ first European production facilities are currently in the planning stage.

In addition, Kafus is finalizing the development of North America’s first $205 million tree free newsprint mill in Lasara, Texas. The proposed Lasara facility will use kenaf not trees to produce stronger, whiter newsprint that will consume less ink. This unique project will not use chlorine and is permitted to utilize its wastewater stream to irrigate surrounding fields of kenaf. Once these projects attain full capacity, KIST will be responsible for growing and harvesting kenaf from about 30,000 acres in the lower Rio Grande Valley of Texas.

Providing Sustainable Solutions to Global Industry Through

Advanced Technology and Renewable Resources

This release may contain forward-looking statements that are subject to risks and uncertainties. Such risks include, but are not limited to, developing separation/absorption process to cleanse oily waste water and create biomass fuel on a commercial basis, and market acceptance of such products, that the Company has experienced losses and will continue to experience losses in the near future, and that the Company is highly leveraged. These risk factors are set forth in the Company’s filings with the Securities and Exchange Commission. Readers should not place undue reliance on the forward-looking statements, which reflect management’s view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

Copyright © 2000, Kafus Industries Ltd. All rights reserved.

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