Waste to Fuels Maker Seeks Up To $80M in Venture Funding

LanzaTech NZ Ltd., which turns waste gasses into fuel, is going to hit up investors this year for $60 million to $80 million in its effort to develop new technology. So reports Bloomberg.

LanzaTech, based in Auckland, New Zealand, is currently developing projects with Baosteel Group Corp. and Shougang Group in China to use emissions from their steel mills to make ethanol for vehicles, said CEO Jennifer Holmgren. The company will contemplate an initial public offering in about two years, once it has an operational plant, she said.

A 30 million gallon-a-year plant to convert gases from steel mills into ethanol costs about $80 million, Holmgren says. The plant it is currently building with Baosteel will produce 10 to 12 million gallons a year. The plant with Shougang will produce about 25 million gallons a year.

Holmgren told Bloomberg that LanzaTech is focusing on China right now because it has 60% of the global steel industry. The firm has relationships with steel mills in Korea and India, but those aren’t likely to result in commercial projects for at least six months, she says.

The company hopes to capitalize on government regulations aimed at cutting pollution by forcing fuel suppliers to increase the amount of biofuel they use when they produce transport fuel. Europe will require 10% biofuel by 2020. The U.S. mandates that gasoline and diesel producers put 36 billion gallons of biofuel into transport fuel by 2022.

To date, LanzaTech has not sold any fuel. Instead, its product has been used to show it is the same as corn-based ethanol already used in automobiles, Holmgren said. The company has also used ethanol to make jet fuel, and it proved to be similar to petroleum-based fuel, she said. Virgin Atlantic Airways Ltd. is likely to be LanzaTech’s first jet fuel customer, according to an agreement the two companies signed in October 2011. So reports Bloomberg.

It’s not the first time LanzaTech is raising capital. In January of 2012, it secured $55.8 million in a series C funding from the Malaysian Life Sciences Capital Fund, with participation from Petroliam Nasional Bhd., the Malaysian state oil company known as Petronas, as well as Khosla Ventures, Qiming Venture Partners, and K1W1, says VentureBeat. And in October of 2012, it received a $15 million loan, through the private equity market, from Western Technology Investment, according to data from CleanTechIQ.

To read the full Bloomberg Businessweek article cited in this story, click here

To read the full VentureBeat article cited in this story, click here

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