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SunOpta Inc. (NASDAQ:STKL) announced that it has signed a 50-50 joint venture agreement with GreenField Ethanol Inc., formerly known as Commercial Alcohols Inc., Canada's leading producer of fuel ethanol.

Both companies will develop and implement commercial scale processes for the production of cellulosic ethanol from wood chips, including the planned establishment of one or more commercial scale plants that will utilize the SunOpta BioProcess Group's patented and proprietary process solutions for the production of cellulosic ethanol.

The first plant is planned to produce 40 million liters (approximately 10 million gallons) of cellulosic ethanol per year, which they claim would be the first commercial scale cellulosic ethanol plant in the world using wood chips as feedstock. Greenfield Ethanol and SunOpta are actively involved in selecting a site for the first plant in Ontario or Quebec. Subsequent plants will be in the range of 200 to 400 million liters (approximately 50 to 100 million gallons) per year capacity.

Steve Bromley, President and COO of SunOpta commented:

As previously announced, the SunOpta BioProcess Group is raising $30 million to fund exciting growth projects utilizing the Group's proprietary technology in the production of cellulosic ethanol. This joint venture is an exciting first step in the use of these funds and we are most pleased to partner with GreenField, combining their world class expertise developing ethanol plants with our world class expertise in biomass pretreatment and cellulosic ethanol technologies.

This sounds like a good team that has plenty of experience, but I didn't think they have that much experience with wood chips. But their website claims that they have experience in pretreatment of wheat straw, corn stover, grasses, oat hulls and wood chips. They do have a high pressure ammonia process for the pretreatment of cellulose which might be applicable. They also have a process for recovering xylitol which can be a valuable byproduct from producing ethanol. They are considered the world leading experts in pretreatment, so why should I doubt them.

STKL 1-yr chart:

STKL chart

Source: SunOpta, GreenField Form Joint Venture to Build Cellulosic Ethanol Plants