China Steel Corporation, Taiwan's largest integrated steelmaker, has given formal approval for a US$46 million (NZ$60m) investment in a commercial scale ethanol facility developed by New Zealand-founded LanzaTech.

The CSC board decision follows a successful pilot of the carbon recycling platform at the White Biotech demonstration plant in Kaohsiung, using steel mill off gases for ethanol production.

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Founded in New Zealand in 2005 and now headquartered in Chicago, LanzaTech turns waste gas from steel mills into ethanol and other high value fuels and chemicals.

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The NZ Superannuation Fund became LanzaTech's second-largest shareholder after a US$60 million investment last December.

In November 2010, CSC and LCY Chemical Corporation formed a joint venture, White Biotech, as part of a green energy alliance with LanzaTech.

The demonstration plant met or exceeded all ethanol production milestones and construction of the commercial scale facility producing 50,000 metric tons per year will begin in the last quarter of this year.

The intention is to eventually scale up to a 100,000 MT per annum unit.

Initially the plant will focus on industrial ethanol and gasoline additives.

LanzaTech ceo Jennifer Holmgren said CSC had long been a champion of using new technologies.

"If we are to keep within our global carbon budget we need all technologies to contribute and, more importantly, we need forward looking industries and organisations, such as CSC, to bring these technologies to market," she said.

She was quoted in the Biofuels Digest saying the problem one always has in scaling is getting someone to agree to be the first.

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"We now have another partner that is interested in scaling our technology," Holmgren told the Digest.

LanzaTech has so far raised more than US$200 million from investors including the super fund, majority shareholder Kholsa Ventures, and Stephen Tindall's K1W1.

When the super fund investment was announced late last year, Holmgren said the money should see the company through until 2017 when it would be earning revenues from its first commercial plant.