Biofuel firm's journey from low-tech to world recognition

Sean Simpson. Photo / Supplied

In a Parnell laboratory glass vats of broth containing billions of micro-organisms bubble away, carefully observed by white-coated scientists.

Since 2005 Auckland bio-science outfit LanzaTech has developed and patented a strain of bacteria that consumes polluting industrial gases and converts them into valuable ethanol, which can then be used in the production of biofuel.

The company says it's about two years away from commercialising its technology, which enables the production of ethanol without the growing of feed crops, such as corn, used in other methods.

Sean Simpson, the firm's co-founder and chief scientist, laughs when he recalls the low-tech methods used to get the project up-and-running during its cash-strapped founding year.

In 2005 dairies were scoured for disused fridges, which could be converted into low-cost incubators for LanzaTech's fledgling laboratory at Industrial Research in Parnell. Rotisseries were bought from the BBQ Factory, which became an economical means to continually rotate test tubes.

Securing funding - first in New Zealand and then further afield - allowed the project to develop.

A "pilot plant" was set up at the Glenbrook steel mill in South Auckland. The company now has around 40 staff spread across three locations in Auckland, Chicago and Shanghai.

In July, LanzaTech entered a partnership with Chinese steel corporation Baosteel, and will construct a pre-commercial research facility at one of the corporation's mills in China next year. It plans to have the facility producing ethanol commercially by 2013.

A similar agreement was reached with another Chinese corporation, the Henan Coal and Chemical Industrial Corporation, in September.

Last month the Parnell-based firm was included in the Global Cleantech Top 100 list, which names some of the world's up-and-coming companies in the environmental technology arena.

A US bio-science website also named LanzaTech this year in its "who's next?" list of the most likely biofuel companies to float on the sharemarket in the near future.

Any chance of the firm making a public offering of shares was "entirely dependent on the world financial situation down the track", Simpson said.

He said after commercialisation the company planned to enter partnerships with industrial firms and share in the profits from ethanol production.

Until then, the firm had capital in the bank to keep things rolling.

In July, LanzaTech secured $23 million in second stage funding from investors led by Chinese venture capital fund Qimming Ventures.

Simpson said Lanzatech's big break came in 2007 when it received US$3.5 million ($5.3 million then) from US venture capitalist fund Khosla Ventures.

"That really opened up a whole different world of investment opportunities ... because we were not trapped in a small pond that is funding sources from within New Zealand."

The firm also has $12 million in funding from the New Zealand Government through the Foundation for Research, Science and Technology.