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Summary:

Investor Vinod Khosla continues to pledge support for next-gen biofuel maker Kior. Despite the company missing its production targets, Khosla and his firm are pledging another $50M to help Kior double its production.

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Kior, the Texas biofuel maker backed by investor Vinod Khosla, is looking to double the production of its biofuel plant in Columbus, Mississippi — with the continued help from Khosla. The company, which missed its biofuel production targets last month by 75 percent and has seen its stock price plummet, announced on Thursday that it plans to build another biofuel facility adjacent to its already completed large biofuel plant.

This new plant is estimated to cost $225 million to build, and Khosla and his firm Khosla Ventures are putting down a combined $50 million to kick off the fund. Will other investors follow on with the remaining $175 million? Despite hitting the milestone of beginning to produce its biofuel last November, the company isn’t expected to turn a profit until at least 2015 and had a deficit of $297 million as of this summer.

If Kior is able to raise the debt and equity for the second plant in Columbus, the company says it will start construction within 90 days of closing the funds. Kior says the second plant will enable the company to be cash flow profitable in 2015.

The move shows just how committed Khosla and his firm are to making Kior work over the long haul. As I wrote in this piece a year and a half ago: Kior is a very long term, and very high risk, play. If Kior becomes the Exxon of biofuels, Khosla would own the majority of the company. But that’s just a chance and there’s many hurdles ahead.

Kior has developed technology that allows it to convert biomass (plants and bio waste) into a bio substitute for crude oil. The company emerged in late 2007 as a joint venture between Khosla Ventures and Netherlands-based biofuel startup BIOeCON. Khosla Ventures provided the early rounds of funding and BIOeCON provided the intellectual property for its “biomass catalytic cracking process,” a thermochemical process that’s been used in the oil industry for decades and which turns out can also produce biocrude from grass, wood and plant waste.

Kior’s CEO Fred Cannon has described Kior’s technology as being able to do in seconds what has taken millions of years in nature (the natural process of how biomass has been crunched into oil). When Kior shipped its first product last November, Cannon called it “the world’s first cellulosic gasoline and diesel fuel products.”

In a release on Thursday Khosla said:

While KiOR has faced normal startup issues at the Columbus I facility, I believe that the Columbus I facility has proven that KiOR’s technology can meet and over time exceed the technology performance metrics of approximately 80 gallons per bone dry ton I expected for 2015, driving toward the ultimate goal of producing 92 gallons of hydrocarbon fuels (or over 150 gallons of ethanol equivalent) per bone dry ton of biomass, particularly given the Company’s continued progress in research and development. I believe that KiOR’s proprietary technology platform is substantially better, and can produce hydrocarbon fuels at lower cost, than any other currently visible biofuels fermentation technology, cellulosic or otherwise, that I am aware of.

Kior’s stock price rose over 50 percent on the announcement.

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  1. Lindsay Leveen Monday, October 7, 2013

    This is a smokescreen to pretend he tried to save the company now that a zillion law suits have been filed. He needs third parties to come to the resue of the bankrupt company. Interesting how the Privince Of Alberta is no longer in on the charade.

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