PyroGenesis Canada Inc. (PYR-T) has notified HPQ Silicon Inc. (HPQ-X) of its intention to exercise its option to acquire a 50 per cent stake in HPQ subsidiary HPQ Silica Polvere Inc.

PyroGenesis, a firm that uses plasma for environmentally friendly applications, will convert its 10 per cent annual royalty on the gross sales generated by HPQ Polvere into an ownership stake in the firm.

Montreal-based HPQ Polvere, which is creating a low-carbon technology that produces a common thickening agent called fumed silica, is now a joint venture equally owned by HPQ Silicon and PyroGenesis.

The step taken by PyroGenesis, which takes effect immediately, executes on an agreement made between the companies to develop a Fumed Silica Reactor (FSR). The technology makes the chemical with fewer carbon emissions compared to its competition, the company claims.

“It really doesn’t change anything, it’s just the way the structure is,” Bernard Tourillon, the president and CEO of HPQ Silicon and HPQ Silica Polvere, told Sustainable Biz Canada in an interview.

But he did add an asterisk: the profitability of the project will increase.

Converting to a stake in HPQ Polvere

HPQ Silicon, a company developing ways to make greener silicon materials, partnered with PyroGenesis on FSR to turn quartz into fumed silica using plasma torches.

“It’s going to be one of those game-changer technologies in an industry for a product that everybody uses in their daily life," ranging from toothpaste to ketchup to paint, the HPQ CEO said.

FSR can cut carbon emissions by over half and slash energy consumption by a minimum of 86 per cent compared to its competitors, the company told Sustainable Biz Canada. Tourillon said it eliminates six kilograms to eight kilograms of carbon dioxide per kilogram of fumed silica.

He would not disclose the size of HPQ Polvere, but said the conversion for ownership would help minimize financing risks, and eliminates one potential obstacle in its discussions with investment partners interested in the fumed silica business.

PyroGenesis opting to use the ownership clause did not come as a shock to Tourillon.

“Because the option’s been there since the beginning, we always knew that at one time it would come. I always expected that to happen once we’re starting to be in production and generating revenues, for multiple accounting reasons.”

As PyroGenesis is an equipment supplier to HPQ Polvere, taking a 50 per cent stake means equipment sales cannot be reported as client transactions but as sales to a subsidiary, which does not have the same value, he explained.

The only point of negotiation left is a shareholder agreement regarding the operations for HPQ Polvere, Tourillon said.

“With PyroGenesis’ conversion of the HPQ Polvere annual royalty option to an ownership stake, the potential benefit to the company from HPQ Polvere’s future success is enhanced, and we are very excited about what the future holds for the FSR project — an initiative we believe is a truly innovative approach to producing fumed silica, one of the most in-demand materials,” Peter Pascali, president and CEO of PyroGenesis, said in a release.

In March, PyroGenesis also took back the rights to a process that makes silicon-based powders from HPQ Nano Silicon Powders Inc., another subsidiary of HPQ Silicon.