Due to recent higher share trading volumes and shareholder interest, the Company provides the following interim report on the Top 40 shareholders (as at 5 February 2016).
| Rank | HOLDER NAME | Securities Held |
| 1 | LJ & K THOMSON PTY LTD |
116,500,000 |
| 2 | ELGAR PARK PTY LTD |
108,540,795 |
| 3 | MENZIES SUPER PTY LTD |
82,089,710 |
| 4 |
MR DANNY SEGAL & MRS JENNIFER RUTH SEGAL |
75,000,000 |
| 5 | MARBRIJEN PTY LTD |
42,966,854 |
| 6 | MR GREGORY MILTS |
37,041,489 |
| 7 | MR IAIN ROBERT MCEWIN & MS DIANNE CHURCH |
36,441,914 |
| 8 | L J THOMSON PTY LTD |
33,500,000 |
| 9 | MADDINGLEY BROWN COAL PTY LTD |
30,535,000 |
| 10 | MR EMILIO MOSCA & MRS ANNA MOSCA |
29,500,000 |
| 11 | CHALLENGE ROOFING PTY LTD |
28,090,002 |
| 12 | P A SHAKESPEARE INVESTING PTY |
27,134,008 |
| 13 | COMSEC NOMINEES PTY LIMITED |
26,385,065 |
| 14 | SUPERIOR COATINGS (AUST) |
25,000,000 |
| 15 | MR LARRY OWEN HANLEY |
23,759,045 |
| 16 | MR ADAM RASZEWSKI |
21,000,000 |
| 17 | MS KATHY XIAO LIU |
20,500,000 |
| 18 | MRS XIAOLI CAI |
19,950,000 |
| 19 | MR MARK ANDREW HASTWELL & MRS KIRSTY LOU-ANNE HASTWELL |
19,180,000 |
| 20 | M WHITNEY PTY LTD |
17,160,000 |
| 21 | JOSEPH BARAKAT & MARIE BARAKAT |
17,109,647 |
| 22 |
MR GEORGE MCDOUGALL & MS GERALDINE FRANCES ELMES |
16,000,000 |
| 23 | JBD INDUSTRIAL PARK PTY LTD |
15,800,000 |
| 24 | JBD INDUSTRIAL PARK PTY LTD |
15,800,000 |
| 25 | JBD INDUSTRIAL PARK PTY LTD |
15,800,000 |
| 26 | CITICORP NOMINEES PTY LIMITED |
15,519,360 |
| 27 | BENCO NOMINEES PTY LTD |
14,000,000 |
| 28 | MR JOHN ROUND & MRS JENNY ROUND |
13,500,000 |
| 29 | B & R SUPERANNUATION PTY LTD |
12,029,083 |
| 30 | NASWEY PTY LTD |
11,700,000 |
| 31 | C & V LATIMER PTY LTD |
11,691,212 |
| 32 | A & K MOORE NOMINEES PTY LTD |
11,250,002 |
| 33 | MR RAFAEL JASON ZAKELJ |
11,000,000 |
| 34 | MR DAVID LLOYD BONNITCHA |
10,833,334 |
| 35 | MR PAUL BOZZO & MRS MARY BOZZO |
10,700,000 |
| 36 | MR CHRISTOPHER JOHN MCGEE & MRS ANNE ELIZABETH MCGEE |
10,300,000 |
| 37 | MRS CATHERINE LOUISE LANGDON |
10,050,000 |
| 38 | MR STEPHEN SCOTHERN |
10,000,000 |
| 39 | MR PETER HAY LINDEMAN & MRS CAROLE BARBARA LINDEMAN |
10,000,000 |
| 40 | THE PEZZANO FAMILY PTY LTD |
10,000,000 |
Exportability. Robustness. Durability. Friability. These words are used to describe the physical handling characteristics of coal generally.
So, how does the Coldry product hold up under the rigours of transport and handling?
Historically we've focused our updates largely on the Coldry process and its development, rarely talking in detail about the parallel and ongoing development of the Coldry pellet itself.
And until recently, we'd focused exclusively on developing one type of Coldry pellet: Coldry BCE.
We coined the term BCE or Black Coal Equivalent, in reference to its higher energy value and ability to substitute for black (thermal) coal in power generation. It was developed to be as robust as possible and, as testing showed, stood up reasonably well to handling compared with regularly traded thermal coal.
The focus on this type of pellet has always been a sensible play into a growth commodity market with the unique differentiator of also leveraging lower value coal assets and mitigating the CO2 intensity of wet, inefficient low-rank coal in power generation.
But, as we’ve engaged with various end users representing a number of applications, we noted some didn’t need the ‘standard’ pellet we’d been focused on developing. Instead, they were after the lowest cost path to lignite drying for downstream coal conversion processes, with little call for ‘export’ toughness.
Evolving in response to the opportunities in different markets for different types of dried lignite, we've been working to engineer and tailor Coldry pellets for specific applications, and we believe we've developed a diversified approach that hits the ‘sweet spot' in each of those target markets.
Let’s now take a deeper look at Coldry pellet development and its implications, starting with a little background on coal specifications and applications:
As a new product in the global thermal coal market, Coldry will naturally be compared with various coals and pegged to existing benchmarks in order to understand its physical suitability for a consumers needs and also to arrive at a price.
There are several market Indices for a range of coals where benchmark specifications around energy, sulphur, ash and moisture content are identified and pricing is assessed, with premiums and discounts applied depending on differences in the coal. Lower ash and sulphur attracts a premium. Lower net energy content results in a discount vs. the benchmark.
What aren't always apparent to the layperson are the underlying physical specifications of various coals that determine handling performance such as hardness, sizing and the propensity to generate fines. These factors are important to consumers of thermal coal and there are standard clauses in Coal Sales Agreements that limit the percentage of fines in a shipment and specify other performance properties.
Transport, loading and unloading, stacking to and reclaiming from storage piles. All this handling knocks the coal around and generates a certain amount of fines and dust, leading to product loss, environmental issues and transport costs.
There are several handy measures for different aspects of physical ‘toughness', including:
With this in mind let's now take a look at the Coldry pellet, as it's evolved to reach the point where we can tailor a ‘fit for purpose' dry lignite product to specific market needs.
We know Coldry is drier, higher in energy and isn't as prone to the same high spontaneous combustion risk as lignite. However, it's not as dense as most black coal.
The key, we've found, is balancing ‘toughness' with the requirements of the supply chain.
Too soft and you end up with too many fines. Too hard and the product costs more to pulverise before use.
So, where does Coldry stand on ‘toughness'?
The development of today's Coldry pellets was arrived at through several leaps in pellet quality as the process has been developed and optimised across more than 4000 hours of pilot plant research and development.
Between 2011 and 2014 pellet density and compressive strength increased by ~35% and ~90% respectively with a corresponding significant reduction in fines generation.
More recently, on top of these pellet improvements, we've successfully trialled a simple add-on technique that delivers an ‘export' product for consumers. This shape is smoother, the size is uniform and the pellet is a further ~10% higher density and ~20% stronger, generating less dust and fines than ‘standard’ Coldry pellets. Still, it's not as hard as some thermal coals, making it less energy intensive to pulverise before use.
The outcome is we're able to ‘program' and ‘tweak' the Coldry process to produce three distinct variants of Coldry, tailored to the following markets:
‘Gateway' product: Lower density, this Coldry product variant can be dried more quickly, lowering production cost. It is ideal for in-situ applications, delivering a dry feedstock into value-added coal conversion processes for pyrolysis, gasification, liquefaction or power generation.
‘Domestic' product: Medium density – suitable for transport and handling environments in local markets. Can be used as a black coal equivalent in thermal coal applications, or as a feedstock for more distant value-added coal conversion processes.
‘Export' grade: Higher density – this variant is more suitable for markets with harsh transport and handling distribution channels. Can be used as a black coal equivalent in thermal coal applications, or as a feedstock for value-added coal conversion processes.
Coldry: Product Diversification
Above: Gateway product (left), domestic product (centre) and export grade (right).
As an indicator of ‘toughness’, the following chart shows the relative density on the horizontal axis and strength on the vertical axis. This illustrates the significant strides made in pellet development, driven by the progress and understanding gained through process optimisation studies at our pilot plant.
But what does this mean in practical terms? Developing this fundamental understanding of how changing certain parameters within the Coldry process produces various levels of pellet ‘toughness’, has resulted in the ability to meet the needs of a range of applications.
Simply, the ‘Gateway' solution includes significant opportunities for ‘tighter’ integration with downstream processes and can utilise hotter waste heat streams to produce more Coldry from a given plant footprint, lowering capital intensity and cost per tonne compared to ‘Domestic’ Coldry. This makes Coldry an attractive front-end drying option for coal conversion processes that are highly sensitive to cost. This is a really compelling scenario given the expected future requirements for coal-derived products. More on our ‘Gateway' solution in a future article.
The ‘Domestic' product is ideally suited to local supply chains with moderate handling requirements. In terms of deployment, this grade of Coldry can be produced from a Coldry plant bolted on to an existing facility, or from a new, tightly integrated plant. The Coldry Design for Tender (DFT) and the current work with Thermax for the proposed demonstration plant in India are geared toward this product type.
The ‘Export' grade Coldry product can also be used locally if desired, but is extremely robust and therefore highly suitable in the context of the abrasive and unforgiving handling conditions encountered in supply chains across the seaborne thermal coal trade. The low cost addition of pellet forming and sizing capability to the existing plant design reaps gains in product durability.
In short, whether the end user is a thermal coal consumer looking for harder, tougher product or a coal conversion process looking to dry lignite at lower cost, we've optimised the parameters within the Coldry process to create a product that can meet the needs of the application and the price sensitivity of the end user.
This, we believe, gives Coldry a much broader application footprint than originally envisaged, which in turn creates an even more attractive deployment proposition for lignite resource owners looking to maximise the value of their asset.
For more information on Coldry and its applications, please contact Mr Ashley Moore, Managing Director at [email protected].
Dear fellow shareholders,
While there is no material new information I’m able to disclose at present with respect to our engagement with NLC, NMDC and others, I would like to provide a brief recap of our current direction and activities ahead of our short break over the Christmas & New Year period.
Firstly, our office is now closed and will reopen 9am, Monday 5 January 2015.
For urgent enquiries, please email us - [email protected].
Matmor Acquisition
As announced on 4 December 2014, we’ve formally acquired the Matmor technology.
This is significant in that it removes complexity relating to discussions with NMDC and NLC around progress of Matmtor, along side Coldry, and this is important in their decision making process.
With the conclusion of the Matmor acquisition, we’re in a position to step forward in our development and investment discussions with both parties.
Coldry Demonstration
As shareholders will be aware our primary focus throughout the year has been on developing a suitable Coldry demonstration proposal with NLC. A distant second until recently were discussions and activities relating to Matmor development, with NMDC.
The Coldry Feasibility Study is currently moving through detailed Board-level review at NLC, and as outlined at our recent AGM we’re recasting the Coldry Feasibility Study to cater for a three-party approach incorporating Matmor.
This extra layer of activity has seen revisions to our indicative timelines, however we believe the goal of reaching agreement on the combined development of Coldry and Matmor with two highly capable partners warrants the focus and effort.
Bringing it together
The synergies are clear. NLC have lignite. NMDC have iron ore. ECT has technologies that can add value to both.
Joining forces via a suitable collaboration framework acts to mitigate risk, which is an important consideration for any commercialisation activity.
Coldry demonstration ahead of Matmor Pilot development, mitigates the risk of the front end raw material preparation stage for Matmor.
Matmor Pilot development provides a higher value pathway for NLC’s lignite, mitigating the offtake risk implied by the cyclical nature of coal prices by providing the ability to produce both thermal coal or Matmor feedstock pellets.
With this in mind, our key activities moving in to the new year will centre around:
Phase 2 Matmor testing on NMDC ore is currently underway following the receipt of several tonnes of NMDC ore and NLC lignite.
As mentioned at our recent AGM, the work ahead is challenging, yet achievable and with your continued support, and the dedication of the ECT team toward delivering our objectives, I believe we can realise the considerable potential of both the Coldry and Matmor technologies.
I wish you all a pleasant festive season and look forward to providing further updates in due course.
Sincerely,
Ashley Moore
Managing Director
ASX Announcement - released 11:00 Monday 18 February 2013
Environmental Clean Technologies Limited (ASX: ESI) (ECT or Company) wishes to provide the following update on the Coldry Design for Tender (DFT) program.
Key points
Background
Arup formally commenced work on the Design for Tender (DFT) program for ECT's planned 2 million tonnes per year Coldry Commercial Scale Plant (CSP) on the 28th October 2011 (ASX announcement 31 October 2011).
The initial scope of works focused on the delivery of a preliminary design, sufficient to allow a skilled construction contractor to provide a tender quote for construction purposes. Whilst this scope of works is largely unchanged, it has evolved to accommodate recent events, allowing the strategic re-focus of activity to meet changing needs and emerging opportunities.
Changing Needs
As previously announced, the full package of works was broken into several phases, commencing with the core process module and the design development options associated with equipment selection, layout and optimisation of key performance parameters.
As ECT progressed the DFT activity, concurrent work to develop investment interest into the CSP made it increasingly clear that attracting funding for the CSP would rely on a staged approach involving commercial demonstration to de-risk the project. This re-focused the design effort to prioritise the detail associated with the delivery of a Commercial Demonstration Plant (CDP) and connecting services.
Phases 2 & 3 of the DFT continued to progress in line with the re-focus on the CDP.
New Opportunity
In August 2012, the State and Federal Governments announced the Advanced Lignite Demonstration Program (ALDP), aimed at supporting technologies to bridge the gap between Pilot plant and Commercial demonstration. The program (http://www.dpi.vic.gov.au/energy/innovation-and-research/etis/advanced-lignite-demonstration-program) appeared an ideal match to the stage and development readiness of Coldry technology's CDP. Indeed, ECT announced it had been shortlisted for consideration under the program (ASX announcement 13 December 2012) and will deliver a detailed proposal by 19 March 2013.
As a result of this new opportunity, the decision was made to align the DFT program, objectives and timelines with the ALDP objectives and timelines to provide for the strongest possible chance for positive outcomes.
To that end, the status today is:
Next Steps
Following these steps, we expect to be in a position to finalise the design and move towards the construction phase of the project, which includes finalising funding, signing construction agreements and commencing site works. While the timeline has many elements, we aim to begin the construction phase in Q4 this year.
For further information contact: Mike Davies – Managing Director on +61 3 9909 7684 or [email protected]
Dear Shareholders,
This is an important period for your company as we implement strategies to commercialise our valuable Coldry and Matmor technologies while evaluating other commercial opportunities.
We have recently achieved several important milestones that we believe will be critical to the future of your company:
The ECT board has a policy of communicating with and informing shareholders of significant developments and has developed this Shareholder Update as one means of updating you. It is envisaged these will be provided quarterly.
We welcome your feedback on this communication and we look forward to providing a further update in coming months.
Michael Davies
Executive Chairman and Managing Director
The full update is available via download (PDF): Shareholder Update-June 2012
Dear Shareholders,
Welcome to the first of our 2012 updates.
I’d like to start by acknowledging you, our shareholders, for your ongoing commitment as we continue to deliver in line with our stated commercialisation strategy.
The ECT Board has a policy of communicating with and informing shareholders of all significant developments at the company and has developed this Shareholder Update as one means of communicating with shareholders on a regular basis. It is intended that we provide these updates on a quarterly basis.
In this update we cover a broad range of activities in depth. We trust this proves informative and welcome your feedback.
We look forward to providing a further update in three months time.
Sincerely,
Michael Davies
Executive Chairman and Managing Director
As advised to the market, the Environmental Clean Technologies Limited Non-Renounceable Rights Issue closed on 23rd December 2011 with $2.2m of the anticipated $3.8m raised over the period.
As further announced on 10th January 2012, the Company has secured an additional $695k by way of a placement, with a further $405k to be placed subject to shareholder approval.
These efforts provide the Company with $3.3m of immediate working capital and the ability to finalise Phase 1 of the Design for Tender (DFT) program.
The Company’s capital program is focused on:
During the course of the “road show” in support of the Non-Renounceable Right Issue, a number of shareholders expressed a strong preference for additional “face-to-face” briefings from ECT’s team.
To this end, a set of briefings will be conducted in the second quarter of 2012.
The Company wishes to acknowledge the efforts of its advisory team from Greenard Willing, led by Glenn Fozard. As shareholders will appreciate, capital markets have been extremely volatile, with confidence battered by global events. Accordingly, the successful completion of the capital program over the past four months is the result of a good plan, well executed and solidly backed by our committed shareholders.
We are pleased to advise that ECT has been successful in claiming substantial cash rebates of its Research and Development expenditures through the Australian Taxation Office.
$188,000 was received as an R&D rebate for the 2009/10 tax year and $364,000 was received this month for the 2010/11 tax year.
Furthermore ECT will file amended taxation returns for two previous years where we have determined that the R&D claims were understated.
We are also in the process of determining how to best leverage the various further R&D and Commercialisation support programs available from the Australian Government.
The DFT program will deliver to ECT the detailed engineering required for a 2 million tonne per annum (mtpa) Coldry plant comprising multiple modules. The DFT engineering will enable determination of likely operating costs and will enable ECT to seek bids from qualifying constructors for the building of the 2 mtpa plant. In effect, use of the DFT engineering output will provide ECT with operating and capital cost estimates, within defined limits, for a large-scale plant.
Research and Development, in the case of a process like Coldry, involves the incremental scaling-up of capacity to achieve commercially viable production. These steps mitigate the risk of failure by ensuring learning’s are achieved in logical sequence and at reasonable cost while limits in scalability are identified. Coldry has followed this scale-up pathway, from lab-scale in the early 1980’s through to batch scale, then pilot scale by 2004 under the Calleja Group. ECT have advanced the pilot plant in collaboration with JC Steele to refine the operational parameters, gathering data to inform the detailed design of the commercial scale plant currently under way by Arup.
ECT intends to demonstrate the economics of commercial scale Coldry production in Victoria by building and operating a single module (150,000 to 200,000 tpa) commercial scale production facility. ECT is advised that the relevant coal industry “test” for commercial scale production is of this order (often expressed as 500 tonnes per day). Following clear demonstration of capability, capacity, capital and operating cost from this single module deployment, ECT envisages the expansion into, firstly, the full 2 mtpa as per the DFT, with further capacity increases as logistics, demand and investment interest develops.
ECT has developed a draft proposal seeking investment in such a facility; this is elaborated on in item 11 following.
The last six months has been eventful in terms of progressing Coldry IP protection globally. In this period, formal patents were granted in two significant and key geographies – China and the USA. In the last days of 2011, we were also notified that the Canadian patent was granted, and ECT is now waiting for the formal issuance.
In Australia, as shareholders are already aware, the process for the granting of the Coldry IP patent continues. An objection was received by IP Australia from another party seeking to prevent the issuance of our patent. The Directors are confident the objection is without foundation and expect that the Coldry Australian patent will be issued in due course. However, these procedures can take time, and the Directors will keep shareholders updated on progress.
Matmor Research Manager, Keith Henley-Smith, produces an iron sample from Indian lignite and millscale
As previously advised, ECT has completed the developmental scoping work associated with our current 1 tonne per day Test Plant.
The next stages for our Matmor technology are associated with the development of a Detailed Design for a Pilot Plant at larger scale – approximately 6,000 tonnes of iron per year, and then the construction and operation of that Pilot Plant. That would then provide data for further scale up to commercial scale operations.
ECT is currently seeking partners to collaborate in this next phase of activities. Partners would ideally bring metal technology expertise and investment appetite to the venture, in return for which they would share in the benefits of the commercialised technology.
Globally, iron and steel consumption growth is most significant in India as that nation enters a significant period of industrialisation and infrastructure development. India’s domestic steel production growth is striving to match the increases in demand, however it will be difficult to achieve given that India
has virtually zero reserves of coking coal. Given this, Matmor technology offers a unique opportunity – decoupling the production of iron from the need to secure coking coal supplies. It is with this in mind that we have commenced early discussions in India seeking interested parties to join with ECT on the commercialisation of Matmor. Early discussions with some of the major Indian steel producers have been encouraging.
Phase 1 of the DFT program is continuing, and has re-started activity following a short break over the holiday period. The schedule is largely unchanged, with Arup now mid-way through their detailed engagement with Loy Yang Power to obtain all key process and locational data to incorporate within the design. Phase 1 is fully funded.
While the effects on the domestic power generation industry have been speculated upon widely, there are few clear signals from the Victorian generation sector on exactly how they will be responding to the introduction of the carbon tax.
Loy Yang 'A' Power Station
It is likely that, while one or more local generators have submitted tenders for the facilitated closure program, 1,000 MW or more of Victorian generation capacity may be closed, though only after replacement capacity has been designed, built, installed, commissioned and proven reliable. This may take 5-10 years to accomplish. Meanwhile, efficiency improvements that drive down CO2 emissions have significant cash value. These may be simply achieved by using a blended fuel comprising raw lignite and Coldry pellets. This is the medium term potential opportunity ECT see coming from the implementation of the Carbon Tax in July this year.
Longer term, ECT see greater domestic opportunity in CO2 mitigation in the development of new technology generating equipment as well as the conversion of (Victorian) coal into other fuels and value-added chemicals.
In respect of Matmor, the process has a significantly lower CO2 footprint than traditional blast furnace iron making, making it an attractive option in light of carbon pricing.
As advised in October 2011, ECT signed an agreement with Tincom of Vietnam to progress development of the Victoria Coldry Project, subject to certain conditions being satisfied.
Under the agreement, ECT is obliged to provide Tincom with all of the engineering detail from the DFT program. Tincom will use the information provided to have a third party expert conduct an independent Feasibility Study in order to satisfy itself of the economics of the project.
As reported above in item 6, the DFT program, which was initiated in late October 2011, continues to progress on schedule and the results of Phase 1 are expected to be available in April 2012. Phase 2 will be initiated immediately on completion of Phase 1 and Phase 3 will follow immediately thereafter. We expect to receive the full DFT information pack in October 2012.
As Tincom requires the full information from the DFT program, we expect they will commence their Feasibility Study around November 2012.
ECT Directors had meetings in India during January with several major Indian coal and steel industry participants.
It is understood India recently issued directives requiring all new coal fired electricity generators to source 30% of their coal needs from overseas. This action is intended to reduce consumption of local Indian coal reserves and thereby effectively extend the life of those reserves. Coldry, domestically produced in India, is of interest to the major lignite producers and consumers as it enables more efficient usage of India’s lignite reserves. Also the sourcing of Coldry from other locations including Australia (and potentially Indonesia due to its proximity to India) is of real interest as this can provide some of the imported coal necessary to comply with the new legislation. Importing Coldry will also have the effect of extending the life of the lignite reserves in India.
During meetings with Indian steel producers we presented a sample of Matmor produced using Indian sourced lignite; it got their attention. As stated above, India has virtually zero reserves of coking coal but significant reserves of iron-ore. Matmor provides India with the opportunity to become more self sufficient in the production of primary iron and steel by reducing their reliance on the imported coking coal.
At meetings conducted in Busan, Korea during January negotiations were successfully completed with K-Coal Co. Ltd. to enter into agreements with ECT.
A Memorandum of Understanding (MoU), providing K-Coal with exclusive sales and marketing rights for Coldry into South Korea, was signed as was an agreement for K-Coal to provide consultancy services through its President Mr. Eiichiro Makino to assist in the commercialisation of Coldry across Northern Asia, including Korea and Japan.
At the time of the signing, I stated, “K-Coal is well positioned to participate in supplying Coldry coal into the very large and growing thermal coal consumer industry in Korea. K-Coal will build on the very strong relationships its parent company S&J Group has with the major energy companies in the region”.
Mr. Makino became President of K-Coal on 1st January 2012, after almost forty years with Sojitz Corporation of Japan and its predecessor company Nissho Iwai Corporation. Mr. Makino is regarded as one of the coal industry’s foremost technical and commercial experts.
In respect of the MoU, S&J Chairman Dr. Kim Sung-Ryeal commented “S&J Group evaluated numerous coal drying technologies before we decided on Coldry. We like the fact that Coldry utilises a low temperature and low-pressure process, which means that the water released, is clean. S&J Group is a clean energy company and this is important to us. Also we are confident that ECT’s Coldry process is cost effective when compared to other technologies.”
Whilst in Korea, ECT personnel met with the Vice Mayor for Economic Affairs for Busan Metropolitan City and the Chairman of the Busan Metropolitan Council together with senior K-Coal and S&J Group executives.
We were very impressed with the support to Busan area companies that the city government provides. S&J Group and K-Coal are well known to the city government and it was evident from our meetings in Busan that there exists a very strong and supportive relationship between the companies and the city government.
S&J Group is a diverse, Busan Korea based group of companies with interests in Energy Distribution, Food Production, Leisure, Clean Technologies and Information Technology
As advised above in item 3, ECT intends to demonstrate the economics of commercial-scale Coldry production in Victoria by building and operating a single module (150,000 to 200,000 tpa) production facility. The intended location is Loy Yang, in the immediate vicinity of the Loy Yang A power station.
ECT plans to establish a Special Purpose Vehicle (SPV) for the purposes of constructing and operating this initial production facility.
Coldry 3D model with coal hopper, mills and extruder in the foreground.
After demonstrating the economics of Coldry production in this location, ECT proposes to expand the facility progressively to increase production capacity. The final production capacity of the expanded production facility could feasibly be in excess of 20 mtpa as the limit to the number of modules is simply the available waste heat streams.
Preliminary estimates indicate the cost to establish the initial single module pre-production facility at Loy Yang, together with the operating expenses over the first 12 months of operation, will be A$50m to A$60m (with significant savings available when executing a multiple module installation). The actual financial consideration for the pre-production facility will be advised on completion of the DFT.
ECT proposes to provide appropriate equity in the SPV and take a shareholding in proportion with its equity contribution.
Other Australian companies have indicated their willingness to consider contributing capital in exchange for appropriate equity, however it is expected that up to 50% of the total equity will be available for other investors.
Coldry 3D model showing conditioning belt (left front) and packed bed dryer (main structure).
ECT and its potential Australian co-investors wish to attract globally recognised resource companies and globally significant thermal coal consumers as investors in this project.
Equity investors in the SPV will be entitled to a share of production from the pre-production facility equal to the percentage of equity held by the shareholder/investor.
After proving the economics of Coldry production from Victorian lignite by means of the pre-production facility, ECT will offer the shareholders in the SPV the right to maintain their percentage equity share in an expanded, commercial scale production facility, for appropriate financial consideration. By maintaining their percentage equity share, equity participants maintain their entitlement to a share of production based on the proportion of equity held.
Since our last newsletter in early June, we've delivered the next step in our Victoria Coldry project; the signing of the binding licence agreement with TinCom on 25 June.
The complexities and nuances of advancing the commercialisation of a disruptive, high capex, long-lead time, first-of-a-kind technology such as Coldry with a foreign partner mean the process has taken longer than expected. Having said that we are on track per previous announcements and various activities are advancing. More on TinCom and the Victoria Coldry project below.
We've been busy strengthening our team with the recent appointment of two new members:
The addition of Dan provides increased resource to our financial management and reporting efforts, while reducing outsourced Accountancy costs. Dougal's appointment provides the bandwidth to manage inbound sales queries in addition to driving sales and route-to-market campaigns.
In this newsletter we cover a few topics:
Funding Agreement: We explain the recent capital raising with La Jolla Cove Investors"
We announced this week a funding arrangement with La Jolla (pronounced 'La Hoya') Cove Investors providing A$2.5M.
Click on the below links to read more:
Link - Proposed Issue of Convertible Notes
Link - Funding Agreement Signed
Those with their finger on the pulse of the finance markets will know placement terms, including discounts of 15 to 25% plus 5-7% brokerage to microcaps in this market are now typical.
The capital raising committee (Stephen Carter, Larry Hanley and Kos Galtos) considered the very low ESI share price, coupled with our confidence in the business per previous announcements (such as TinCom and other opportunities) and determined that shareholder interests were best served by not immediately actualising an upfront dilution that a placement would cause.
Accordingly, a convertible note (c-note) was negotiated with an investor - La Jolla Cove Investors (LJCI) - that has been in regular communication with us for over 18 months on what we believe are more positive terms, that may allow conversions at higher share price levels in the future, and with shareholders not having to fund brokerage costs.
Additionally, LJCI offers other benefits to ECT, such as providing US introductions to target prospects and investors.
Whilst we acknowledge that a few investors that have previously benefited from the opportunity to take a heavily discounted placement have voiced their displeasure, the board agreed this form of funding was the most appropriate and in the interests of all ECT holders at this time.
JC Steele Strategic Alliance: A win-win partnership with a world-class equipment company
We announced on 19 October (click here for the full release) the signing of a Co-operation Agreement with JC Steele (JCS).
JC Steele manufactures, supplies and services equipment for the clay, brick and tile making industries, including mixers and extruders. In our opinion, they are market leaders.
Extruders are required for the second stage of the Coldry process, known as 'Attrition and Extrude'. The stage where we initiate the exothermic chemical reaction that allows us to achieve a dewatered, densified pellet.
Coldry represents a new market for JCS and an opportunity to significantly increase their sales. In exchange ECT gets world-class knowhow and practical in-kind support.
The mixer-extruder being installed at our pilot plant is a '25 Model'. It's a baby version of the '90 Model' planned for the commercial scale Coldry plant.
As part of the 'Localisation Study' for the Victoria Coldry Project, this '25 Model' will allow fine tuning of the specs and operational parameters of the '90 Model'.
Beyond that, it provides greater throughput and operational flexibility at out Pilot Plant, enabling larger runs of test coals from around the world at lower cost, which is great for ongoing sales efforts.
Coldry Intellectual Property: Recent developments and what they mean to the business
On 21 October we updated the market on the granting of an Innovation Patent for Coldry and our view of the 'opposition' to the Coldry Patent in Australia.
Click here to read more.
TinCom Update: Latest News and coming events
Following on from a formal engagement here in Melbourne with Vietnam's Ambassador in September TinCom Chairman Thang Van Luong and Project Director Lihn Vu Dac will be in Melbourne over coming weeks to progress the Victoria Coldry Project.
Accompanying TinCom is a senior delegation of Chinese power station representatives who will be touring the Coldry Pilot Plant and Loy Yang power station on Friday 5th November.
Per previous announcements to the market, the next stage in the Victoria Coldry Project involves the Localisation study, detailed engineering and design, scheduled to start before the end of the year.
Victorian Market
With an election in our home State of Victoria on 27 November, we take a look at the local power generation industry in the context of the Government's new Climate Change policy and talk about what it means to ECT and Coldry
The following article appeared in a recent edition of The Mining Chronicle:
We at innovation company Environmental Clean Technologies might hold the domain name 'cleancoal.com.au', but we're the first to admit there really is no such thing.
What we are in the business of is cleaner coal, and our revolutionary brown coal drying technology known as Coldry, is not only less CO2 intensive than brown coal, but game-changing in the context of brown coal resource value and energy security.
We have an economically viable, immediately deployable brown coal drying solution capable of producing a black coal equivalent (BCE) fuel suitable for export to the lucrative thermal coal market.
The export market has been our focus to date due to lack of clear domestic policy around carbon emissions. We recently signed a multi-million dollar license agreement with Vietnamese company TinCom to create a business which will process and export two million tonnes a year of Coldry from Victoria to Vietnam from early 2014, expanding up to 20 million tonnes a year in its first decade of operations.
However, we believe Coldry is a perfect solution for any Government committed to aggressively pursuing emissions reduction while still recognising coal will still be a major part of the energy mix for decades to come.
The Victorian Government has recently taken the lead in this country, with the release of its Climate Change Policy committing to 20% emissions reduction by 2020 compared to 2000 levels - the equivalent of a 40% cut per person (factoring in population growth).
It also includes shutting down the Hazelwood Power Station in the Latrobe Valley - considered Australia's 'dirtiest' power plant - in order to make way for better technologies.
It's an ambitious target that calls for radical action and new technologies.
Their action plan is broad and importantly seeks to achieve reductions via an open book, least-cost approach. This is great news for ECT as we've done our numbers and are confident Coldry will be the most cost effective drying solution on the market.
This is important when you consider Government policy now requires any new coal-fired power station to emit no more than 0.8t CO2 per MWh, compared with the 1.3 to 1.5 tonnes currently emitted.
This means the time is right for ECT to position Coldry as a powerful player in a carbon-constrained energy future, not only in Australia but also around the world.
Coldry is a 'gateway' technology for cutting carbon emissions by 30 to 50 per cent when coupled with new state-of-the-art power stations in brown coal-based electricity markets like Victoria.
A Coldry enabled solution
Coldry, as a front-end drying solution to proven, state-of-the-art black coal (not brown coal) power station technologies like PC/USC or IGCC could replace Hazelwood's 1600MW baseload capacity, reducing CO2 emissions by more than 7 million tonnes a year. This is equivalent to:
Coldry's efficiency lies in the natural exothermic chemical reaction, which actively expels physically and chemically trapped moisture and the use of low-grade waste heat from a co-located power station to achieve cost-effective evaporative removal of the expelled moisture.
It also helps to 'drought-proof' the co-located power station, because water captured via the process is usable without costly treatment.
Our figures based on replacing Hazelwood indicate we can recover up to 4 billion litres of water, while simultaneously reducing evaporative loss from the cooling towers of the power station itself.
The Coldry plant can therefore reduce the need for the power station to take water from the local rivers.
Moreover, it's estimated there are 500 years worth of brown coal in Victoria waiting to be mined.
Until Coldry, these reserves were black coal's 'poor cousin' - too waterlogged and prone to spontaneous combustion making it uneconomic to export and dangerous to store.
It's not a solution that's been developed in a hurry to meet the current Government challenge.
Coldry technology has been years in development and has been subject to rigorous scientific, engineering and environmental investigation.
With all this in mind, we welcome the latest moves by the Victorian Labor Government to aggressively pursue emissions reduction, which improves certainty and lays the foundation for potential deployment of cost-effective domestic CO2 reduction initiatives.
We look forward to working openly with the Government to make Coldry a priority consideration, especially with news Hazelwood Power Station is to be phased out.
There's no turning back: the world needs new energy sources to meet surging demand.
Using ECT's revolutionary Coldry technology, we have an affordable, incremental solution.
As long as the world is burning coal, let's burn it better.
Importantly, our AGM is booked in for Friday 26th November (details here). I look forward to presenting, along with the Board, the years' results and our plans moving forward.
Kos Galtos
Chief Executive
I am pleased to report that we continue to make tremendous progress on several fronts since our last newsletter. Three projects are underway and another two are on the drawing board for Coldry, our flagship coal drying and water recovery technology.
MATMOR, our cost-effective process to produce a high quality, high purity and high iron content product, also continues to show significant potential. More on that below but first, I would like to reassure you about ECT's position in relation to two topical government policy areas, namely the controversial Resource Super Profits Tax (RSPT) and the postponed Emission Trading Scheme (ETS). We believe that, with our robust business model and positioning, neither will be detrimental to ECT. Let me explain.
As our business is focused on licensing Coldry technology, by which brown coal is dewatered and transformed into black coal equivalent (BCE) pellets, as distinct from coal extraction (or mining) activities, we believe that we are exempt from the RSPT. However, it is worth noting that a possible outcome of the tax may be an increase in the selling price of coal globally. To this end, ECT could actually benefit. If our competitors (predominantly thermal coal producers in New South Wales and Queensland) are forced to pass on their RSPT payments to their biggest customers, our product at once becomes more attractive and competitive. Click here to see our website for a more detailed discussion on this issue. Details of the RSPT are expected to be finalised in 2012 and we will continue to monitor developments and keep you informed.
In relation to the ETS, listed renewable energy companies experienced a significant price drop recently in response to the Federal Government's decision to delay the scheme, widely reported to have the potential to stall up to $2 billion of investment in new power stations. It is true that without an ETS, there isn't a driver for brown coal-based power stations to change from burning cheaper. Despite this, our local Coldry business case is good because importantly, our Loy Yang based project is export focused and is therefore not reliant on a domestic ETS. In our target markets, demand for thermal coal and logically, for upgraded black coal equivalent (BCE) products like Coldry, is strong and expanding in emerging economies.
However, if and when an ETS takes effect, we believe Coldry is the most cost effective option available to local brown coal-based power stations looking to reduce emissions without stranding or abandoning the lignite resource or the multi-billion dollar assets it fuels. Even now, a 10 per cent blend of Coldry into the Victorian power stations would meet the previously proposed 5 per cent cut in emissions by 2020 - without the need to modify the power stations boilers. In essence, as Coldry does not rely on a carbon price to cost-effectively sell into the thermal coal market, ECT is well placed, with or without an ETS. Again, click here to see our website for a more detailed discussion on this issue.
The 2011 financial year is shaping up to be busier than ever for ECT management and we welcome Amit Aggarwal to our team as Financial Accountant. I'm sure you'll agree he is a valuable addition when you view his profile below. Thank you to all our shareholders for your ongoing support and as always, I welcome your feedback.
Kos Galtos
Chief Executive
The TinCom funded, Loy Yang based project moved ahead significantly last month. Under a newly signed agreement, TinCom will become shareholders in ECT and expand the feasibility study to include the preparation of detailed design and tender packages by Arup. We believe these factors clearly signal TinCom's commitment in driving the Latrobe Valley project at an accelerated pace.
The project's special purpose vehicle, Victoria Coldry Pty Ltd, of which ECT will ultimately own ten percent, is to be licensed exclusively to manufacture and market Coldry Black Coal Equivalent (BCE) pellets within Victoria (for 5 years) and Vietnam. It also has non-exclusive rights for plant construction in Indonesia and the rest of Australia. ECT retains rights to build Coldry production capacity at its own facility in Victoria and will earn royalty (CPI-adjusted) of A$5 (ex GST) per tonne from Victoria Coldry.
The project will be rolled out in four phases, anticipated to be completed in 2020. Phase 1 is planned to deliver a two mega tonne plant in 2013 from which, at full production, ECT would earn A$10M per annum in revenue. This revenue would grow to A$50M per annum on completion of Phase 2 (scheduled for 2015) and by 2020 recurring revenue would amount to A$100M per annum in today's dollars.
Update: MATMOR Commercialisation
A Marketing Report by Melbourne based energy and resources consulting firm NEGOTIACTION, and preliminary Technical Report by HATCH confirms our belief that the market dynamics are very favourable for the deployment of MATMOR.
Niche, high margin opportunities have been identified that are not being exploited by traditional or emerging technologies. For example, electric arc furnaces that represent a market in excess of 435 million metric tones a year and induction furnaces would clearly benefit from MATMOR which uses low ranking coals to produce high quality iron product. Apart from its greater energy efficiency and reduction in emissions, factors in favour of MATMOR uptake include a significant increase in steel demand throughout Asia and India, increasing input process, and the need for a low-cost operation that can be deployed at a regional level.
Current engineering work flowing from the recommendations in HATCH's report involves testing and documenting in greater detail aspects of the plant which will help refine the assumptions for scale up moving forward. Some tasks within the current program are straight forward such as the addition of several temperature gauges to fine tune data collection. Other tasks include the analysis of gas flow and composition within the various sections of the plant at different stages of operation to refine the energy-mass balance data in order to increase design accuracy and pricing. Once sufficient progress has been made, ECT will seek partners for the development of a pilot scale plant that has a target capacity of 7,500 metric tones per annum of iron.
Introducing our new executive team member
Amit Aggarwal - Financial Accountant
Amit has recently been appointed Financial Accountant, bringing this key role in house. The role was previously outsourced to our Accountants, RSM Bird Cameron. With increasing activity, the time involved in managing the accounts, preparing board reports and working with our auditors PKF, reached the point where it commanded the attention of a full time resource. Amit, in addition to accounting qualifications (CPA), has a degree in engineering, providing added value and support to our sales efforts via financial modeling of each Coldry business case we prepare for prospective licensees.