Cellulosic biofuels maker KiOR says it has temporarily shut down its facility in Columbus, Miss., while it installs upgrades to improve output, yield, and reliability. Details of the closure emerged four days after the firm was featured on “60 Minutes.” The television segment highlighted the continued—and nowadays rare—enthusiasm for alternative energy technology by KiOR’s major investor, venture capitalist Vinod Khosla.
On a conference call, KiOR CEO Fred Cannon told analysts that the Columbus facility, the company’s first, would not produce fuel for sale during the first quarter of this year. The plant, which opened in late 2012, uses pyrolysis and catalysts to make gasoline and diesel from wood chips. Cannon said KiOR would spend $10 million on capital improvements and $25 million to develop higher yield catalysts to boost output.
Although Khosla owns a majority of the company, KiOR has had public shareholders since 2011 when it raised $150 million in an initial offering of stock. Since Jan. 9, when the company discussed the shutdown, investors have pushed the firm’s share price down more than 20%. And Raymond James stock analyst Pavel Molchanov has downgraded KiOR’s stock to “market perform” from “outperform.”
“The downgrade is based on the lack of visibility,” Molchanov tells C&EN. “It’s not a criticism of the technology or process. We know it works, but so far not at the scale we hoped for.” An added strain is the company’s need for more cash within the next few months, Molchanov notes. Although Khosla and investor Bill Gates have pledged a combined $100 million to KiOR, at the end of 2013 the firm had just $25 million in cash.
The Columbus plant’s output of fuel increased over the course of 2013 to almost 400,000 gal in the fourth quarter, but that represents less than 15% of the plant’s intended capacity. Cannon told analysts that the improvements will continue through 2014 and that he expects the plant to produce significantly more fuel by the end of the year.