LanzaTech to Convert Acquired Ethanol Plant for Biochemicals

LanzaTech NZ Ltd., a closely held biofuels company backed by billionaire Vinod Khosla, will convert a U.S. cellulosic ethanol plant it bought from Range Fuels Inc. to produce chemicals from biomass.

The $5.1 million deal completed on Jan. 3 provides LanzaTech with its first plant, Chief Executive Officer Jennifer Holmgren said yesterday in a telephone interview.

“We have been doing a lot of work on steel mill gases and other gases to ethanol mostly, but in the laboratory we have shown that we can make chemicals,” Holmgren said. “We don’t have any assets where we can control the feedstock that are large and are able to help us scale up,” she said.

Auckland, New Zealand-based LanzaTech is developing a process that uses proprietary microorganisms to convert carbon monoxide-containing gases from steel mills, oil refineries and chemical plants into ethanol and chemicals. It’s also working with the U.S. Department of Energy on making jet fuel.

The Range plant, located in Soperton, Georgia, was sold Jan. 3 at a fraction of the financial support it received. The U.S. Department of Agriculture required a foreclosure sale following Range’s default a year ago on an $80 million loan guarantee the agency offered during George W. Bush’s administration. The plant was also supported by more than $160 million in venture funding and part of a separate $76 million grant the Department of Energy awarded under Bush.

While LanzaTech will use the facility to make biochemicals, it has partnerships in Asia focused primarily on converting steel mill gases into ethanol with seven of the global Fortune 500 companies, Holmgren said.

The company has established joint ventures to build plants at steel mills owned by Baosteel Group Corp., China’s largest manufacturer, and Shougang Group, the fourth-largest, Holmgren said.

Other companies exploring the use of its technology include Indian Oil Corp., LCY Chemical Corp. (1704), Posco (005490), Mitsui & Co., and Harsco Corp. (HSC), Holmgren said. An initial 100,000 gallons-a-year demonstration plant at one of Baosteel’s mills near Shanghai is complete and will be commissioned later this year, she said.

To contact the reporter on this story: Andrew Herndon in San Francisco at aherndon2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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