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KiOR starts production at Mississippi biorefinery

Associated Press Modified: November 8, 2012 at 6:30 pm •  Published: November 8, 2012

JACKSON, Miss. (AP) — Alternative fuel firm KiOR says it started production in October in Columbus, Miss., and plans to make its first commercial shipments before November's end.

CEO Fred Cannon told analysts on a conference call Thursday that the technology is working "and producing a high-quality oil. I am extremely pleased with the performance of our technology at Columbus."

Based in Pasadena, Texas, KiOR built a $220 million-plus refinery in Mississippi to extract the equivalent of light crude oil from wood chips. It refines the oil into gasoline and diesel fuel. It's supposed to build a second refinery in Natchez, Miss.

KiOR uses a chemical process called pyrolysis to convert the chips to crude. Until now, the process has never been used on such a large scale. Cannon said his company is "all about changing that paradigm" by using non-food plants to make biofuel that existing cars and trucks can burn. Most biofuel in the United States is ethanol from corn or biodiesel from soybeans, and using those crops can drive up the cost of food.

Making commercial shipments would be a major milestone, because it would allow the company to start collecting revenue for the first time. Right now, KiOR is spending cash that it raised from borrowing and stock sales. That includes a $75 million low-interest loan that the state of Mississippi made in 2010.

The company reported third-quarter financial results, saying it lost $27 million, or 26 cents per share, during the period. KiOR lost $66.7 million, or 64 cents per share, in 2011's third quarter. The company didn't report any revenue during either quarter.

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