Wellington, July 13 NZPA - New Zealand biofuel entrepreneur LanzaTech has raised a further $US18 million ($NZ24.5 million) from investors, led by a venture capital company targeting China.

LanzaTech uses bacteria to produce fuels and chemicals from industrial waste gas, and has signed with Chinese steel company Baosteel and the Chinese Academy of Sciences to commercialise its technologies.

Qiming Ventures was among investors in the latest capital-raising, which will allow LanzaTech to speed up the commercialisation of its process.

"The significance of its technology means that fuel can be produced with no impact on food supply or land use," said Qiming managing director Gary Rieschel.

"Using industrial waste gases curbs GHG (greenhouse gas) emissions and so maintains manufacturing sustainability in China."

Other investors in the capital-raising were Softbank China Venture Capital, and existing investors Stephen Tindall's K1W1 investment fund and Khosla Ventures from the United States.

The company planned to have a pre-commercial plant in operation next year, followed by a commercial facility producing over 200 million litres of ethanol a year, LanzaTech co-founder Sean Simpson said.

LanzaTech also planned to use carbon dioxide as a feedstock gas.

Dr Simpson has estimated that the world's steel mills generated enough carbon monoxide emissions to produce more than 200 billion litres of ethanol a year.

Since an earlier capital-raising in 2007, the company has produced ethanol at a New Zealand Steel mill in Auckland using waste gases as evidence of its technology.