Materials that can cut pollution are sure to be hot commodities these days. SDCmaterials said Monday it snagged $14 million in venture capital for developing catalysts and additives for reducing toxic emissions from cars, refineries and other industrial operations.

Tempe, Ariz.-based SDCmaterials is developing nanomaterials for use in the catalytic converters. A catalytic converter is a standard auto part that turns exhaust from a combustion engine such as carbon monoxide, hydrocarbon and nitrogen oxides into mostly carbon dioxide and water.

The company has developed a manufacturing process and plasma technology that vaporizes the precious metals instead of dissolving them in solutions, a method that eliminates the use of toxic solvents and disperses the metals more uniformly, said Maximilian Biberger, CEO of SDCmaterials. The process also produces catalysts that can better withstand high temperatures, he added.

The production also requires only half the amount of metals such as platinum and palladium, Biberger said.

"Even though we have a novel manufacturing technology, it's so efficient that it absolutely competes with existing products," Biberger said. "We expect our products to be cheaper because we use less precious metals."

Nanostellar has created similar catalysts, but it pursues a different strategy. Rather than make powders, it devises formulas and then licenses its intellectual property to large chemical companies. It already has some deals with large automakers.

Founded in 2004, SDCmaterials plans to start pilot production for catalysts targeting the chemical, refinery and other non-automotive markets first.

Pilot production is scheduled to begin in the second half of this year, and the company would move into high-volume production in 2010, Biberger said. The company expects to generate $1.4 million in revenue in 2009, he added.

Pilot production for the automotive market would take place next year.

The company plans to hold a grand opening of its factory north of Dresden, Germany, in two weeks. The factory will have the capacity to produce catalysts for five million vehicles, or 1,500 tons of catalysts for refinery and other non-automotive markets, Biberger said.

SDCmaterials is entering production in Germany because most of its key customers are in Europe. The company also initially is targeting the diesel car market, which is much larger in Europe than the United States.

The company is working with Japanese automakers on catalysts for gasoline cars. It also is developing products with a Chinese automaker.

Biberger declined to disclose the names of customers, except to say that they include some of the largest chemical companies. The startup is funded by BASF Venture Capital, the investment arm of the German chemical giant, BASF Group.

BASF Venture invested in SDCmaterials before, and put in more money in the $14 million, Series B round. Invus Financial Advisors led the new round, which also included money from existing investors Emerald Technology Ventures and individuals.

SDCmaterials raised $11.5 million for Series A.

Aside from catalysts, the startup also is developing supercomposites to be used in armors for cars, aircrafts and people.

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