VeraSun takes stake in SunEthanol

South Dakota's VeraSun Energy (NYSE: VSE), one of the largest U.S. producers of ethanol, said today that it made a minority investment in Massachusetts-based cellulosic ethanol developer SunEthanol.

"While we believe corn-based ethanol production will continue to play a key role in our industry long into the future, ethanol from cellulosic feedstocks will complement corn- based ethanol in meeting the growing global demand for renewable fuels," said Bill Honnef, VeraSun Sr. VP of sales and marketing.

VeraSun said that SunEthanol's technology consolidates multiple steps into one naturally-occurring process using a variety of agricultural feed stocks to produce ethanol.

"We continue to evaluate technologies that have the potential to efficiently convert cellulose to biofuels," said Honnef.

SunEthanol, founded in the fall of 2006 in Amherst, Mass., is partnered with the University of Massachusetts. The company's chief scientist, Susan Leschine, is a professor of microbiology at UMass.

In addition to VeraSun, SunEthanol also gets backing from Battery Ventures in Waltham, Mass., Long River Ventures in Amherst, and Phoenix, Ariz.'s AST Capital.

VeraSun, which has 340 million gallons a year of production capacity from three facilities, announced in July that it would acquire 330 million more gallons from ASAlliances Biofuels (see VeraSun acquiring 330M gallons more production).

VeraSun has another 330 million gallons of production under construction and development around the U.S.