BRAZIL (From news reports) -- Spinnova has pressed pause on the production plant currently being developed in partnership with Suzano. The Finnish textile fiber firm reported a delay in "reaching the targeted process metrics" (see: cost) needed to enter the next phase of building.

Looking at the bigger picture, the postponement is yet another blow sustained by the Respin co-owner, following a fiscally-discouraging 2023 and an "eventful" first half of 2024.

In March, the Adidas collaborator signed a letter of intent (LOI) with the Brazilian manufacturer on a potential new production facility for wood-based Spinnova fiber. Spinnova and its partners were to deliver the fiber production technology to Suzano, the facility's owner and operator. Per the LOI, the preliminary target capacity of the facility was 20,000 metric tons of fiber per year, likely located near an existing Suzano pulp mill.

"The LOI is a non-binding agreement where parties wish to record certain criteria as requirements for moving, into the pre-engineering phase of the new facility," Spinnova previously said in a statement from March. "The LOI includes also preliminary terms and conditions for the new facility."

Suzano is responsible for the micro-fibrillated cellulose (MFC) development. Spinnova is responsible for the fiber-spinning development. As Suzano was solely responsible for "finding the right funding" for the facility, Spinnova wasn't on the hook to raise capital for the plant. However, the opportunity to invest in other, future plants "remained at Spinnova's discretion."

The pre-engineering phase of the facility was expected to start in the second half of 2024. To enter this phase, a few things needed to happen. Spinnova needed to deliver a Process Design Package (PDP) for the new facility, and Suzano needed to issue strategic approval. More vaguely, "certain process and fiber metrics" at the Woodspin facility were to be met to move forward. Neither Spinnova nor Suzano responded to Sourcing Journal's request to elaborate on details about those processes and metrics.

With 42 days left in 2024, this pre-engineering phase was not entered--and will not be entered--before the end of the year.

However, Spinnova said the PDP is ready, as it met the LOI's criteria. Fiber quality demonstrably met its undisclosed targets. Furthermore, that fiber quality was confirmed by the agreed brand and supplier partners. A yarn spinning test, conducted earlier this month, corroborated that Spinnova fiber at its current blend level--which was last reported to be a 30 percent Spinnova, 70 percent cotton blend--is fully spinnable and thus can achieve the required (although unclear) yield levels. The technology development of fiber spinning had "progressed well," increasing the output of the fiber drying units. The main sub-processes were validated separately.

So, what aspect of the LOI wasn't achieved?

"Validating process efficiency metrics at target capital and operating expenditure levels at the Woodspin factory for the entire process, from pulp to fiber," will not be achieved this year, per Spinnova. Essentially, while some sub-processes hit their fiscal goals, the desired cost targets of the process as a whole were not achieved.

As such, Spinnova and Suzano will pursue "alternative plans" to find the fastest path forward to validate the end-to-end process efficiency metrics needed to enter the project's next phase.

Spinnova said the targeted timeline for the next wood-based fiber factory will be announced "later."

The duo opened their first Woodspin factory last May, though they've been joint venture partners since 2020. That factory acts as an industrial demonstration of two things--Spinnova's technology and the largest pulp manufacturer in the world's MFC technology--and is used for qualifying the process and fiber output to support the investment decision for the new facility.

In late January, Spinnova CEO Tuomas Oijala said the ramp-up of this factory progressed so much that he believed Spinnova could start delivering fiber to its customers in the first half of the year. It's unclear where production currently stands.

"Spinnova is simultaneously continuing to expand its own pilot capacity to demonstrate the entire process from pulp to fiber using any cellulosic feedstock," the Marimekko partner said in a statement. "This is per its announced plans to develop new raw materials to drive technology sales for fiber production from raw materials other than wood."

Spinnova said its financial guidance for 2024, and its strategy targets, remain unchanged.