Environmental Clean Technologies Limited (ASX: ECT) (ECT or Company) is pleased to announce the commencement of its feasibility study for the deployment of a proposed 600,000 tonne per annum lignite upgrading plant in Victoria’s Latrobe Valley, utilising its patented, zero-emission Coldry technology.

Key points:

The proposed project, to be located at EnergyAustralia’s Yallourn power station in Victoria’s Latrobe Valley, seeks to enable the lower-CO2 use of lignite, creating a ‘gateway’ to a broader range of existing and emerging applications.

The feasibility study follows the initial scoping study completed in November 2017 and aims to support the Company’s Australian strategy for the further commercialisation of its Coldry technology.

Of interest to shareholders will be the increased scope of the planned project since it was first proposed.

In the Company’s announcement on 15 November 2017, a plant capacity of 170,000 tonnes per annum was identified as the initial starting point. Further project development activity over the past year has resulted in identification of broader opportunities, both locally and internationally, to support a substantially increased scale. The Company is continuing to qualify these opportunities.

ECT Executive Chairman, Glenn Fozard commented, “The emphasis and focus on our India project has taken necessary priority over the past year, consuming most of our resources. This resulted in the need to take additional time following the completion of the scoping study to identify the key drivers to underpin our potential Latrobe Valley project. With our India project nearing financial close, the time is right to start the feasibility study.

“We mentioned last November that building a zero-emissions Coldry plant aligns well with the recently returned State Government’s ‘Future Use of Brown Coal’ policy. The industrial and political environments are supportive of technologies that deliver low or zero-emissions solutions to higher value use of lignite.

“The domestic utility heat and steam market, most of which switched to gas following the closure of the brown coal briquette plant in Morwell in 2014, has suffered from a doubling of the gas price and tripling of the wholesale electricity price since 2015. We’ve progressed local market development and testing of Coldry product from our pilot plant at Bacchus Marsh, northwest of Melbourne, signing a 5-year $1.3 million contract for the provision of turnkey ‘steam services’ (announcement 9 August 2018) and establishing a viable solid fuel alternative to expensive gas that can be blended with biomass”.

“Our vision for the proposed Latrobe Valley project is to establish a scalable ‘gateway’ application, enabling a broader, more environmentally sensitive use of lignite which will support economic activity and employment for the region. This project holds significant interest in providing increased energy security through diversification of Victoria’s energy solutions and longer-term interest as a gateway enabler to the deployment of High Efficiency Low Emissions (HELE) electricity production if required and feasible, and low-emission chemical production, like hydrogen from Victoria’s world-class lignite assets.”

Coldry to deliver improved economic and environmental outcomes

Coldry converts low-value brown coal into high-calorific value, low-moisture solid fuel pellets suitable as a gateway feedstock for applications such as:

Coldry utilises low-grade waste heat, producing the world’s most cost-effective brown coal fuel pellet via a drying solution with zero direct emissions.

The key to the efficiency of the Coldry process, which takes lignite moisture from 60% down to between 10% and 15%, is the intended utilisation of ‘free’ low temperature waste heat from an adjacent power station.

The use of waste heat would minimise ‘paid’ energy in the process, keeping the cost down.

An environmental upside for the host power station is the significant reduction of the requirements for cooling water, reducing water taken from the local environment.

Next steps

Over the next four months, the Company will resource several key deliverables including:

The feasibility study, once complete, will allow the Company to determine whether it is economically, commercially and technically feasible to proceed with a Coldry project in the Latrobe Valley.

In addition, ECT will progress upgrades at its Coldry high volume test facility at Bacchus Marsh, as well as a number of key infrastructure support assets, improving raw coal access and demonstrating our steam and boiler packages to Victoria and Tasmania.

ECT recognises the potential for improved brown coal use in helping balance affordability, reliability and emissions intensity across the nation’s energy system. The establishment of a large scale, zero-emission Coldry plant would take the Latrobe Valley one step closer to becoming, once again, the national flagship for reliable, affordable energy production in the context of an emissions constrained environment.

Glenn Fozard commented, “High Efficiency, Low Emissions (HELE) power stations, hydrogen production and fertilizer production are all potential industries of the future for the Latrobe Valley and they all need dry brown coal. Coldry can provide this economically and with zero-emissions.”

Background to Latrobe Valley Coldry project

Running parallel to the Company’s continued R&D programs to support its India project, 2017 saw the re-emergence of project development opportunities in the Latrobe Valley.

Formal preparations for the feasibility program for the construction of a large-scale Coldry demonstration plant in the Latrobe Valley began in July 2017 (see announcement 12 July 2017).

Titled the ‘Gateway Fuel Victoria Project’, this initiative stands in strong alignment with government policy and regional development directives and responds to clear energy market signals.

In line with the established project planning structure, the feasibility study program is divided into several phases, including:

The feasibility study will aim to establish the business case for the construction of a large-scale Coldry plant in the Latrobe Valley.

The Company will provide further updates on the progress and outcomes of the feasibility study in due course.

 

For further information, contact:

Glenn Fozard – Chairman           [email protected]

Environmental Clean Technologies Limited (ASX: ECT) (ECT or Company) is pleased to announce the signing of a binding contract for the sale of Coldry solid fuel in the Victorian market via the provision of a turnkey solution for steam services.

Key points:

Following on from previous announcements outlining the Company’s upgrades to its Coldry High Volume Test Facility (HVTF) northwest of Melbourne and subsequent trials of Coldry solid fuel with several potential customers (6 February 2018 & 29 June 2018), the Company has today signed a contract with a large food manufacturer in Gippsland, southeast Victoria.

Key Terms:

Value: $1.3 million

Term: 5 years

Fuel: Coldry solid fuel

Services: Operate & maintain boiler system to deliver operational steam requirements

The contract summarises the agreement between the parties to deliver steam required by the customer’s operations and will be followed by a three-month construction and services commissioning phase which aims to establish the baseline steam demand, assess the efficiency gains from planned upgrades and maintain and monitor the subsequent steady state of operations. If ECT is unable to deliver the expected steam demand during the trial period then GBP can cancel the contract, although the company does not foresee this to be a likely outcome.

ECT Chairman Mr Glenn Fozard commented, “This is another positive step for ECT in the local market and is the culmination of business development and engineering activity over several months.

“The driver behind the client’s adoption of Coldry lies in our close engagement and development of a packaged, turnkey solution to deliver steam. We’ve taken the time to understand and quantify the current operational profile of their boiler system, against which we were able to test and benchmark our Coldry solid fuel test product.

“The cost-effectiveness of Coldry solid fuel coupled with our turnkey approach to the provision of equipment, operations and maintenance, fuel and finance, where needed, presents a compelling business case.

“Lead-in analysis indicates we may be able to deliver potential savings of 15% per annum for our client.

“This packaged, turnkey approach is also designed to help mitigate further energy price shocks by locking in a stable monthly fee over five years.”

ECT COO Jim Blackburn commented, “Regarding the Company’s broader local market business development strategy, we’re currently working with several other potential customers on a similar basis and look forward to establishing further sales in due course.

“We understand shareholders would like to know who the potential customers are, how much Coldry they may buy and at what price. Would-be competitors would also like to know similar details. As such, it is not in shareholders’ best interests to disclose potential customers before executing sales contracts. Further, it is not in the Company’s best interests to disclose per-tonne pricing, as that may prejudice other sales negotiations.”

“This local market business model, entailing the provision of packaged solutions has a two-fold benefit. From the customer’s point of view, it solves one of their significant operational ‘pain points’ via a holistic service offering. From our point of view, vertical integration allows us to maximise operational efficiency and control costs.”

Business Case for the Coldry Solid Fuel Turnkey Solution

Fully integrated boiler and steam package offers the following key features and benefits:

Feature Benefit to customer
Multi-feedstock fuel systems Diversified fuel supply options:
With the high efficiency of Coldry solid fuel, systems are also able to blend a broader range of fuels including biofuels (such as pyrethrum briquettes and woodchip) and other similar solid fuels, where feasible and available, diversifying supply options
Bespoke fuel handling systems Lower maintenance cost and more efficient fuel handling

 

Guaranteed steam supply

 

Allows customers to focus resources on their core business

5-year price freeze of production of steam

 

Cost control:
Steam production costs typically 10%-15% cheaper than individual or single-stream service models of fuel supply, boiler operations and maintenance
Boiler equipment, systems and programming designed for the highest available efficiency

 

Lower capital, operating and maintenance costs
Single monthly price for the service, including any capital upgrades and installations Cost control

Coldry is the ideal solid fuel

The Coldry High Volume Test Facility (HVTF)

The Coldry processing facility in Bacchus Marsh has been in place since 2007 and has undergone significant upgrades over the past two years with a focus on increased scale testing of its R&D operations. As a consequence of this activity, the facility currently has ~10,000 tonnes per annum of available test product capacity which it is seeking to sell into long-term contracts. With further capital upgrades, the plant will be able to extend capacity by a further 25,000 tonnes per annum.

Expert Partnerships

ECT has partnered with Mecrus, Australia’s leading provider of steam package solutions for boiler applications and is also engaged with boiler manufacturers (including John Thompson boilers). These strategic partnerships allow us to offer compelling steam and boiler packages. ECT non-executive director Barry Richards is the Managing Director of Mecrus.

Background

Given the level of interest received to date, the Company is confident a sustainable local market exists for a solid fuel to supply energy-intensive industries impacted by rising energy costs.

In parallel to the activity at the HVTF, the Company continues to develop its feasibility study for the establishment of a large-scale Coldry demonstration plant in Victoria’s Latrobe Valley.

Importantly, the proposed large-scale Coldry demonstration plant will leverage existing resources and infrastructure, with site selection at Yallourn power station announced on 15 November 2017.

It is envisaged that the Victorian demonstration plant will be designed to an output capacity of ~170,000 tonnes per annum and will feature a zero CO2 footprint, having no direct emissions.

In support of ongoing R&D for the India project and future projects like the Victorian demonstration plant, the HVTF is targeting an output capacity of up to 35,000 tonnes per annum.

The HVTF is solely an R&D facility and continuous production up to 35,000 tonnes per annum will continue to add to the testing of key features of both Coldry and Matmor in areas such as:

  1. Pellet integrity
  2. Blended additives
  3. Drying temperatures and residence times
  4. Airflow through the packed bed dryer
  5. Process improvements and equipment re-design

All product sold will be done so under the “Feedstock Rules” of the R&D tax incentive legislation.

Solid Fuel Market

The Victorian industrial energy market is defined by the price and availability of appropriate energy sources. Until 2014, brown coal briquettes dominated the local market, followed by gas and biomass. The closure of the Morwell brown coal briquette plant in 2014 saw many businesses switch to gas and biomass. The price of gas has since doubled or tripled for many businesses. Availability of biomass is variable, reducing the reliability of supply. Biomass typically has a lower energy density, and its ash contains elements that foul boiler systems, resulting in lower efficiency and increased downtime for maintenance.

Coldry solid fuel is an ideal fuel for businesses requiring large volumes of process heat.

Further, Coldry doesn’t conflict with the Victorian government’s renewable energy target, as neither wind nor solar are suitable for generating reliable, affordable process heat to such industries.

In this respect, the Company is competing directly with the availability and price of natural gas and biomass alternatives, which given the current supply-demand profile, looks like remaining high and possibly escalating, well into the future.

Beyond supplying energy-intensive industries such as agriculture, the Company sees potential to grow its Coldry capacity in Victoria over time to support any number of potentially high-value applications, including:

These high-value applications can generate jobs and improve productivity while bringing down the emissions intensity of Victoria’s world-class brown coal resource.

The Company will continue to provide further updates on the above activities as they progress.

Building Solid Foundations for ECT’s long-term revenue model

This contract gives shareholders an understanding of one of the core pillars of the Company’s long-term revenue model.

Following many months of engagement by the Company with a range of potential customers, it is apparent that the market for utility-scale steam and hot water is in desperate need of a solution that can deliver capital upgrades and fuel solutions that are reliable and economical. At present, no other companies are offering fully integrated steam and boiler solutions to Victorian and Tasmanian customers.

Over the coming months, the Company aims to establish further contracts of this type while developing key relationships to improve the quality and pace of outcomes, including:

  1. Plant & equipment: Boiler manufacturers able to design boiler packages bespoke to Coldry as the primary fuel source
  2. Finance: partners able to support a zero-capital outlay solution for new boiler system upgrades
  3. Operations & maintenance: Staff with the essential skills to support boiler construction, operations and maintenance

ECT Chairman Glenn Fozard commented, “Local businesses reliant on steam generation have been suffering terribly from skyrocketing gas prices and a shortage of reliable alternative fuels, resulting in an energy affordability and reliability crisis. This uncertainty is impacting the viability of many businesses. It also means ageing infrastructure is not being replaced as companies are reluctant to outlay capital on new equipment without viable fuel alternatives. ECT solves the problem of price volatility, fuel reliability and capital outlay and allows these companies to focus on their core business while we take care of their utility energy needs”.

As advised in previous announcements, ECT will be providing greater detail on its revenue model in the coming weeks.

 

For further information, contact:

Glenn Fozard – Chairman             [email protected]

Environmental Clean Technologies Limited (ASX:ESI) (ECT or Company) is pleased to provide the following update on its research, development and commercialisation activities in Victoria.

Key points

Boiler trials completed

The Company previously announced (21 July 2017) research and development (R&D) trial activities with a large consumer of solid fuel in southwestern Victoria as part of its broader Coldry commercialisation strategy.

This activity, pursued with AKD Softwoods in Colac, is now complete, having delivered valuable outcomes.

Coldry Commercialisation Strategy

Through FY2017 and into the first quarter of FY2018, ECT has continued to develop its strategy for offering a cost-effective solid fuel (i.e. Coldry pellets) for use in steam and hot water boiler systems across Victoria, and potentially to markets interstate and overseas.

The cost-effectiveness of the Company’s solid fuel sits in contrast to the rising costs and falling security of supply of other energy sources, including:

Coldry solid fuel pellets using lignite sourced from the Yallourn open-cut mine, have a distinct cost advantage against all the above options.

ECT Chairman, Glenn Fozard commented, “This advantage is not surprising given the readily available abundance of lignite inside the pre-existing infrastructure. Economies of scale already exist in the natural resource and the relatively low-cost means of extraction.

“The rapidly changing face of Victoria’s fuel supply mix, resulting in increased reliance on higher-priced gas, will continue to place pressure on local industries reliant on reasonably priced fuel inputs to remain competitive. Without a choice of fuel that helps maintain Victorian industry’s competitive advantage, the state may continue to see an accelerated contraction of important sectors such as manufacturing, food processing and other energy-intensive employers.

“Our proposition for commercialisation, therefore, remains clear and concise.

“And while these market opportunities are a clear signal for commercialisation, on their own they don’t make a commercial ready proposition certain. As such, we continue to improve this certainty through effective R&D programming to test and refine variables expected at a larger scale, under a continuous processing environment. This is consistent with our commercialisation strategy where a broad range of demand factors result in market ‘Pull’ as we ‘Push’ with R&D programs that increase technology options (see diagram, below).

 

“Our goal in Victoria is to deliver a zero-emissions gateway fuel plant. We believe this will help ‘future-proof’ Victoria’s energy prices while establishing a scalable access point for the improved utilisation of Victoria’s brown coal reserves, including high efficiency, low emission (HELE) power stations, hydrogen production and fertiliser production, to name but a few.”

Over this last 12 months, the Company has set its strategy, which comprises three targeted programs aimed at testing our alternative solid fuel, produced using our Coldry technology, under commercial conditions. These programs include:

800-tonne Boiler trial – AKD Softwoods, Colac

With planning taking place through May and early June 2017, ECT undertook an extensive trial of Coldry solid fuel produced at the Bacchus Marsh High Volume Test Facility (HVTF) in a 4.2MW (thermal) fluidised bed steam boiler system located in Colac, Western Victoria.

This trial was undertaken in parallel with the stage 2 upgrades at the HVTF, which targeted improvements to storage, drying efficiency, inventory and logistics management and product handling.

After three months, the trial has now been completed and the data processed, ahead of moving into the next phase of a drying simulation program at Bacchus Marsh. The boiler trial, conducted in collaboration with industry partners, AKD, Mecrus, Calleja Transport and Geelong Boiler Systems, assessed all points of the commercial supply chain in producing, transporting and combusting Coldry solid fuel pellets.

Outcomes and learnings from the trials include the following:

Product specification is critical to efficient performance outcomes

Logistics and inventory management are critical elements of a solid fuel business

Identified opportunity for product enhancements through targeted research and development

Support for the commercialisation pathway and test product sales

As mentioned, the data generated via the trial with AKD has proved highly valuable, both in what it has confirmed and in highlighting remaining challenges.

In this respect, and as can be anticipated in a commercialisation program of this scale, the trial presented several key learning opportunities, which provided important feedback to the research team and have driven a number of fundamental changes to the Coldry development program including:

  1. Coal Feedstock:
    1. The trial identified the requirement to switch feedstock coal from Maddingley (Bacchus Marsh) to Yallourn (Latrobe Valley) to deliver solid fuel with lower sulphur and ash.
    2. In the first instance, this change required sourcing of coal and associated transport and logistics management from the Latrobe Valley to the HVTF in Bacchus Marsh.
    3. This change necessitated the reprogramming of production metrics at Bacchus Marsh across the entire processing line, extending the trial program by 3
  1. Product Variability:

The completion of stage 2 upgrades to the HVTF has provided some significant changes to plant operations, which in turn provided unexpected challenges under high volume production. These included:

Having settled the Latrobe Valley logistics arrangements and progressed the next stage of drying simulation trials, the majority of these issues have been addressed.

Notwithstanding the R&D nature of this project, the Company generated $162,000 in revenues from the project.

Jim Blackburn, ECT Chief Operating Officer and executive sponsor of the R&D trial commented, “The trial was an important next step in commercialising Coldry. We had previously shown success in small boiler systems and to take on a system with substantial daily consumption volumes, allowed us to test our operational capability as well as the technical capability of Coldry.”

“We will now incorporate our substantial learnings from this trial into the next phase of our strategy. The interim aim here is to provide a sound basis for stage 3 upgrades at the High-Volume Test Facility and deliver a facility readily able to support ongoing large trials and sales of Coldry pellets.”

One of the key outcomes of the AKD trial was to identify areas of improvement and efficiencies within the logistics chain as well as support further sales and distribution of our Coldry product.

Next Coldry Trial Program – 3000 tonnes

Upon completion of the Drying Simulation Program at Bacchus Marsh, ECT intends to undertake a trial of Coldry solid fuel pellets which will incorporate the benefits of the improvements realised through prior trials and R&D programs.

In addition to its R&D focus, the next trial intends to support the identification and development of contracts for off-take to help underpin the feasibility of the Latrobe Valley Coldry project as well as other commercial sales.

Given the synergies between the Latrobe Valley project and the 3000-tonne trial, the Company has prioritised site selection and market analysis within the feasibility plan. Early determination of a site partner, which will also drive coal feedstock selection, is important to ensure the greatest alignment between the next trial program and the feasibility study for the Latrobe Valley Coldry project.

Further updates will be provided as they become available.

Logistics, Yard Management and Sales Agreement - Jebsens

ECT is pleased to announce it has entered an agreement with Jebsens, for logistics and yard management at its Bacchus Marsh High-Volume Test Facility.

Jebsens are well experienced with the logistical challenges presented by the storage and transport of solid fuel having been the logistics manager for IEPL (the “Morwell Briquette Factory”).

The agreement will see Jebsens manage the logistics chain, including yard management, at Bacchus Marsh and into other plants that are built across Victoria, including the Latrobe Valley Coldry project currently under feasibility.

Jebsens also has strong existing relationships with solid fuel users in Victoria and Tasmania. As a result, ECT has agreed to offer them an exclusive sales services and distribution agreement for the capacity of Bacchus Marsh as well as a further 100,000 tonnes.

Jebsens' role will be to originate and support sales leads, utilising their extensive network of relationships with end users.

The agreement allows ECT to develop sales leads ahead of incurring the costs of the yard management and third-party logistics services. These obligations will only come into effect if the business case is approved by ECT's Board, with sales being a major influence on the approval.

ECT Chairman, Glenn Fozard commented “As a key outcome of the recently completed trial program, we are delighted to add Jebsens to our list of strategic partners. With their knowledge of key markets and customers for this type of fuel, we have been able to establish an agreement which provides both the critical logistics management services, and access to Jebsens' customer relationships. This underpins our Coldry commercialisation strategy in providing potential sales for the full future capacity of the Bacchus Marsh facility (up to 35,000 tonnes per annum) as well as scope for a further 100,000 tonnes per annum from the Latrobe Valley plant, which is currently the subject of feasibility planning.”

“Having an experienced logistics expert who also supports sales of Coldry solid fuel will now allow ECT to focus on technical improvements of the product and operational rigour in running the plant.”

For further information, contact:

Glenn Fozard – Chairman [email protected]

Environmental Clean Technologies Limited (ASX: ESI) (ECT or Company) is pleased to announce the formal commencement of its Feasibility Program for the development of a zero-emissions commercial demonstration Coldry plant in the Latrobe Valley to support the growing need to diversify Victoria’s access to industrial energy supplies and establish a footprint for commercial expansion.

Key points:

Commencement of a Formal Feasibility Program

Further to recent announcements regarding the development of a zero emissions solid fuel plant in Victoria (23 June 2017 & 12 July 2017) the Company is pleased to advise the formal commencement of a feasibility program for the construction of a commercial demonstration scale Coldry plant in the Latrobe Valley.

A Steering Committee has been formed comprising senior ECT executives, and a project team established which is jointly led by ECT Chief Engineers Warrick Boyle and Lachlan Bartsch.

ECT Chairman, Glenn Fozard commented, “Building a zero-emissions Coldry plant, aligns well with the State Governments “Future Use of Brown Coal” policy (see ECT announcement 12 July 2017). The industrial and political environment are now fully supportive of technologies that deliver low or zero-emissions solutions to higher value use of lignite. Our vision is to establish a scalable gateway application, enabling a broader, more environmentally sensitive use of lignite which will support economic activity and employment for the region. This program holds significant short-term interest in providing increased energy security through diversification of Victoria’s energy solutions and longer-term interest as a gateway enabler to the deployment of High Efficiency Low Emissions (HELE) electricity production and low emissions chemical separation, like hydrogen from Victoria’s world class lignite assets.”

ECT Chief Operating Officer, Jim Blackburn commented “We are very pleased to have made a solid start to this program and are delighted in the lead management roles that both Warrick and Lachlan are able to play in this process aligned with, and in parallel to, their greater responsibilities at our Bacchus Marsh R&D facility and on our project in India”.

In line with the established project planning structure, the Feasibility Study program is divided into a number of phases, including:

Scoping Study and selection phase

The project team is currently undertaking a scoping study and selection phase aimed at clearly defining the scope, budget and plan for the Pre-feasibility Study.

In particular, the selection phase focuses on analysing the potential project scenarios (site, scale and configuration) together with the best financial and technical options for the project. This phase will deliver a set of preferred options, refining the scope for the subsequent pre-feasibility level study.

The Pre-feasibility Study will refine estimates for the project’s capital requirements, identify challenges and enable the establishment of a budget, scope and schedule for the Feasibility Study for consideration by the Board. A detailed assessment of the various design configurations, production processes and site options will follow the Pre-feasibility Study, with the aim of identifying the optimum project scenario to proceed to full feasibility.

Upon completion of the Pre-feasibility Study, the ECT project team will, if appropriate, make a recommendation to the Steering Committee for the project to proceed to full feasibility. The full Feasibility Study would aim to establish the business case for construction of a commercial demonstration scale Coldry plant in the Latrobe Valley.

The Scoping Study and Pre-feasibility Study process is expected to be undertaken over the coming months.

 

Figure 1: Project delivery framework (click to enlarge)

 

Jim Blackburn further commented, “With the support of its shareholders, ECT has invested significant resources into the development of its unique technology suite and the framework for commercialisation. This Feasibility Study program, led by our Chief Engineers, and under guidance and support from the executive team, is a great opportunity for the Company to deploy these assets and, we hope, establish a commercial basis for future domestic revenues”.

Subsequent announcements will provide further information on project costs, partners, site selection and other relevant details that will flow from the progress of the Feasibility Program.

 

For further information, contact:

Glenn Fozard – Chairman               [email protected]