ArborGen, a forestry biotechnology company 32 per cent owned by Auckland-based wood processing firm Rubicon, has been cleared to trial a type of eucalyptus that can withstand cold temperatures in the United States.
Rubicon chief executive Luke Moriarty said the US Department of Agriculture's decision to approve thefull rotation field-trial was a major milestone in commercialising a tree variety designed for planting in the southern US, where temperatures can fluctuate widely.
"As well as offering a new source of hardwood trees for the US south pulp-and-paper industry, the new variety also offers significant potential as a resource for the production of clean-burning and renewable ethanol in the future."
However, the market shrugged off the news, as Rubicon shares closed unchanged at $1.04.
Rubicon shares surged to an 18-month high in April after Brazilian authorities approved trials of a eucalyptus tree variety that produces more fibre.
The USDA's animal and plant health inspection service determined the trial would have no significant environmental impact, days after ArborGen was named as a partner in a US$125 million ($161 million) US biofuels initiative.
ArborGen, a joint venture with International Paper, Rubicon and MeadWestvaco, is estimated to be worth between US$100 million to US$150 million.
