Overview – India Strategy

Overview – India Strategy

In response to recent shareholder interest regarding the Company’s activities in India, I’m pleased to provide the following overview on our India strategy and activities.

Please note, this is a general update on our strategic intent and no material or price-sensitive information is provided.


I’d like to begin by touching on the Company’s strategy in general, and then drill down to the activities in India.


Since mid 2011, the Board has pursued a clear objective: Coldry demonstration.

Coldry demonstration is the key to commercial deployment.

Commercial deployment is the key to generating royalty revenue from the Coldry technology.

Revenue is the key to establishing a basis for fundamental valuation of the business and delivering on long-term shareholder value.

To deliver on the demonstration objective, we embarked on the detailed engineering with Arup in November 2011.

This crucial activity has advanced through increasingly detailed levels of engineering and design, commencing with the Design for Tender, progressing through value engineering and refining the capital estimate accuracy along the way. We expect the engineering for the demonstration plant to reach ‘construction ready’ status in the coming month.

This will deliver the level of detail and accuracy necessary to enable a qualified constructor such as McConnell Dowell to build the plant.

The demonstration of the Coldry process at suitable scale is aimed at delivering the process guarantee required for potential end users of the Coldry technology to make an investment decision and deploy Coldry at commercial scale.

The Advanced Lignite Demonstration Program (ALDP) presented an opportunity to help bridge the gap in funding the scale-up from pilot to demonstration scale. As mentioned previously, this joint State and Federal Government program is subject to strict confidentiality, so I can’t provide any comment on our application. I can say that we’ve not yet received any indication from the Government on whether we’ll be selected for funding under the program.

A downside of participating in the ALDP has been the negative impact on shareholder sentiment due to our limited ability to communicate on certain subjects. The Board is of the view that the potential value of the grant on offer, should we be successful, is worth the effort to align with ALDP requirements. As mentioned in previous announcements, the ALDP is yet to run its course and we will make announcements in line with ASX Listing Rules. Regardless off the outcome, we have progressed toward the key objective of Coldry demonstration through our engineering efforts.

At this point in covering the background to our strategy, I’d like to take a moment to touch on Matmor.

Matmor is developed to test plant scale, capable of producing around ~40kg of hot liquid metal per hour. The plant is ‘mothballed’ at present, pending the commencement of the next stage of development. In the meantime we’ve continued raw materials testing at lab scale and further refined the fundamental science around the reduction of various metal oxides in the process.

The Matmor Process requires a slightly modified version of the Coldry Process at the front end to produce the dewatered ‘composite’ pellets that are fed into the Matmor retort.

The rationale behind the strategy of developing Coldry ahead of Matmor is simple; it de-risks the Coldry aspect of a Matmor plant, lowering the overall risk on the way through and enabling focus on the required furnace engineering rather than feed preparation.

Our next objective in relation to Matmor is to develop the process to pilot scale, with a capacity of ~6,000 to 8,000 tonnes per year. With an expected investment of up to $20 million to develop the Matmor pilot plant, we believe this approach to de-risking is prudent.

Coming back to Coldry, we’ve been extremely mindful of the need to develop commercialisation options, locally and elsewhere, independent of ALDP outcomes.

To this end we have been working on opportunities in India for some time. References to this activity go back to ASX announcements made as follows:

With the above in mind, let me drill down on our India strategy and activities, beginning with a high-level view of the India market opportunity and moving then to the key aspects underpinning our drive to deliver tangible results for both Coldry and Matmor.

Outline of the India Market Opportunity

In 2010–11 India was Australia’s third largest export market for energy and non-energy mineral commodities, principal export market for gold, second-largest export market for metallurgical coal, and third largest export market for non-energy minerals. In 2010–11, India was Australia’s fourth largest resources and energy trading partner with resources and energy exports valued at around AUD$14.6 billion.

The International Energy Agency (IEA) reports:

“A combination of rapidly increasing energy demand and fuel imports plus growing concern about economic and environmental consequences is generating growing calls for effective and thorough energy governance in India. Numerous policy reforms over the past 20 years have shifted the country’s energy sector from a state-dominated system towards one that is based on market principles. However, with the reform process left unfinished, India now finds itself trapped halfway along the transition to an open and well-performing energy sector.

India suffered from the largest power outage ever in late July 2012, affecting nearly half of the population. While this incident highlights the importance of modern and smart energy systems, it indicates that the country is increasingly unable to deliver a secure supply of energy to its population, a quarter of which still lacks access to electricity.”

In short, India is a net energy importer today, facing a range of issues in the face of projected growth in energy demand as it aims to bring affordable electricity to that 25% of its population currently without access and its rapidly growing industrial base.

India currently faces the following issues:

  • Insufficient fuel supply
  • Pricing distortions
  • Infrastructure limitations
  • Investment risk

Given the above factors and that power generation capacity is forecast to grow by almost 400% through to 2035, the impetus to upgrade and leverage existing domestic lignite resources has gained momentum.

In the context of ECT, it has a two-fold implication;

1)    Thermal power generation – black coal power stations

2)    Value added applications:

  1. Coal to oil
  2. Coal to gas
  3. Metallurgical coal substitute
  4. Fertilisers

ECT’s India Strategy

Coldry is a ‘gateway’ process to the above and has been successfully tested on lignite from India’s Neyveli Lignite Corporation (NLC).

NLC is a lignite mining and power industry leader and innovator:

  • 28.5 million tonnes per year mined
  • 2,740 MW power generation capacity
  • Centre for Applied Research and Development (CARD) has provided innovative in-house R&D for NLC to deliver new products from lignite

Earlier this year NLC commenced a program aimed at developing options around the upgrading and advanced utilisation of their resource.

ECT has developed a proposal, currently under consideration by NLC, to demonstrate Coldry at their facility, located near Chennai.

Broadly, the proposal seeks to demonstrate the Coldry process and, as part of an integrated value added approach, produce dry lignite for domestic power generation and conversion to higher value products including oil, gas, metallurgical coal equivalent (MCE) and fertilisers via third-party technologies. There is also interest in developing Matmor to pilot scale and beyond.

In line with ECT’s strategic partnering approach, Coldry produced from the demonstration plant at NLC would be utilised for testing in third-party downstream processes ahead of subsequent technology selection and deployment. As such ECT will be actively engaging with technology providers in these areas to develop and deliver appropriate solutions designed to meet NLC’s objectives.

Assisting us to engage productively with NLC and other potential India market partners, ECT has been working closely with local market advisors. This approach has been instrumental in building local market connections and qualified, responsive expertise on the ground, to facilitate and guide ongoing discussions.

In addition, we’re working closely with Yes Bank of India, who will provide corporate advisory and project funding assistance, in addition to assisting us to establish links into qualified plant and equipment fabrication partners.

Next Steps

With the Coldry plant design and engineering nearing completion, the ability to rapidly adapt the core design to the conditions in India is expected to minimise engineering and design cost. This aspect, combined with cost-effective local fabrication and construction, has the ability to significantly impact the economics of the proposed project. Our current estimates place the cost of deploying Coldry in India at ~50% of an equivalent project here in Australia.

The development of partnerships with skilled equipment manufacturers and fabricators in India will provide benefit beyond Indian Coldry plants, with export of components from India to Coldry plant projects globally.

The expected timeframes to conclude discussions and move to formal agreements remains open, however NLC have signalled their intention to refine the timeframe in the near term.

Impact on the Victorian Coldry Demonstration Plant

We intend to pursue demonstration and commercial expansion in Victoria as previously stated. This does not prevent a parallel development in India, or vice versa.

I hope this update has provided clarification on our strategy and activities in India and per ASX Listing Rules, if any material events emerge from the strategy, we will make announcements accordingly.


Ashley Moore
Managing Director

For further information contact:

Ashley Moore – Managing Director +61 3 9909 7684 or [email protected]