Letter to Shareholders: TinCom License Agreement... what it means to ECT and Victoria
Welcome to a new era for your company. As you are aware, we officially signed an historic license agreement with our Vietnamese partners, Thang Luong Investment and Joint Stock Company Pty Ltd, or TinCom.
The Signing Ceremony for the Victoria Coldry License Agreement was attended by a Vietnamese delegation led by H.E Vo Hong Phuc, Minister for Planning and Investment; the very minister responsible for issuing TinCom's $100M foreign investment license last year. Also in attendance was our own Federal Trade Minister, Hon. Simon Crean.
This is a substantial deal, both for ECT and for Victoria, and represents the largest trade deal to date between Victoria and Vietnam.
For ECT, it is the culmination of two years intense negotiations and enables us to fast track commercialisation of our revolutionary brown coal dewatering technology known as Coldry.
In Stage One of this world-first project, we expect to produce 2 million metric tonnes per annum of Coldry black coal equivalent (BCE) pellets.
For ECT this will generate $10 million revenue per annum, based on royalties of $5 per tonne.
From that starting point, we anticipate to expand production up to 20 million tonnes of pellets per annum by 2020. Timing of this roll out is ultimately subject to the upgrade of rail and port infrastructure in the State of Victoria.
The project will broadly consist of the following stages:
- Project Feasibility Study
- Detailed Design
All going as planned, we expect ECT's royalties from this project to rise to $100 million per annum at full capacity of 20 million tonnes a year.
The Company also stands to earn potential dividends from its 10 per cent stake in the Joint Venture Company it has established with TinCom, Victoria Coldry Pty Ltd.
Commercialising the Coldry technology and exporting these pellets will be a huge financial achievement for our Company and our technologies.
But this deal has implications for the entire State and for its vast coal reserves.
Importantly, it heralds a new era in brown coal technology. Until now, brown coal has been regarded the 'poor cousin' to black coal as it has been too waterlogged to economically export or store, is prone to spontaneous combustion and is significantly more CO2 intensive than black coal.
Our Coldrytechnology, which creates dewatered black coal equivalent (BCE) pellets from brown coal, provides a new opportunity to tap into this unrivalled resource.
What this represents is an unparalleled export opportunity that also mitigates future CO2 emissions. We are seeking to work with the State Government to upgrade ports and rail infrastructure to meet projected international demand.
The State also stands to make significant financial gains from supporting our export endeavours.
It currently collects royalties from brown coal miners on around 70 million metric tonnes per year of raw brown coal.
At full capacity, the 20 million metric tonnes per annum Coldry export plant on site at Loy Yang will require around 40 million metric tonnes per annum of raw brown coal, potentially increasing royalties to the State by more than 50 per cent.
On a local level, this project means jobs for Victoria. The Latrobe Valley has long been recognised as a region reliant on industry and has been heavily affected by wider economic pressures.
The Coldry production plant project will create an estimated 200 construction jobs, followed by 25 operational positions, growing to around 100 as the project expands.
This deal is a win-win-win scenario for ECT, Victoria and the environment.
Yes, the environment! We've received a lot of media coverage in the past week. The links below will help separate 'well-intentioned but ill-informed' opinions from fact and highlight what Coldry really means for the environment.
We are delighted to be showcasing this game changing technology and are proud to bring its potential to fruition.
Chief Executive Officer