Chinese swoop and buy up cellulosic ethanol technology that Uncle Sam funded

sstklFascinating news after the International Fuel Ethanol Workshop & Expo in Milwaukee, Wisconsin ended.

On Friday , Sunopta (NASDAQ:STKL) (TSX:SOY) announced officially that it has signed a contract to sell a cellulosic ethanol pilot demonstration facility, which is based on SunOpta's patented and proprietary biomass conversion technology, to China Resources Alcohol Corporation (CRAC) for research and development on cellulosic ethanol production at their facility in ZhaoDong City, Heilongjiang Province.

Based upon completion of final details, the companies anticipate that this cellulosic ethanol research facility will start up in late 2006.

Terms of the sale were not disclosed. As part of the transaction, SunOpta and CRAC intend to enter into a Joint Development Agreement between SunOpta, CRAC and Novozymes for the development of cellulosic ethanol in the People's Republic of China.

The Chinese central government recently announced a $5.0 Billion US capital investment over the next 10 years on ethanol capacity expansion with a focus on cellulosic ethanol. They launched their industrial scale ethanol production only 5 years ago, but are evidently putting a great deal of resource into this technology.

STKL currently trades at $8.73, up $0.63 from the previous close, on 835,369 shares.

The Chinese are no doubt somewhat relieved to be able to buy into this technology which Uncle Sam has been funding with the aid of EU and Canadian companies. Where this leaves the further development in the US is somewhat unclear - evidently the thrust of Novozymes efforts and the now wholly owned CRAC process will reside in China.

The Spanish project will of course still go ahead, presumably with some co-ordination with CRAC.

Neither Novozyme or Sunopta have any comments on their websites.

Watch this space!