AnaeCo Initiating Coverage AnaeCo is an Australian-based and listed Alternative Waste Technology company that plans to enter the UK market to meet the immediate need to augment or substitute existing landfill sites. In order for the UK to achieve its 2013 Municipal Solid Waste (MSW) market target, capital expenditure in the range of £5-6bn is required. AnaeCo’s patented DiCOM solid waste processing technology utilises a bioconversion process that creates specific biological conditions for micro-organisms to accelerate the natural bioconversion of organic material. The DiCOM system incorporates advanced sorting, recycling, anaerobic digestion and aerobic composting, converting the organic content of MSW into Renewable Energy (biogas), agricultural grade compost and recyclables such as steel, aluminium, glass and plastics. The technology is a patented hybrid biological process that converts organic content of MSW into organic fertiliser/biofuel and biogas. The unique biological process along with front-end separation differentiates AnaeCo from other alternative waste technologies. It can be retrofitted to existing waste transfer stations or constructed as a turnkey operation. A burgeoning opportunity in the UK exists to substitute or complement landfill sites. MSW is predominantly disposed in landfill sites today. However, increased gate fee taxes imposed via UK legislation currently at £32/t (rising at £8/t pa), along with imminent UK legislation to revalue Renewable Obligation Certificates (ROCs), have led to increasing attention on this sub-sector. The market opportunity is for a step-change in transitional solutions so that landfill providers avoid the prospect of hefty fines. As a macro theme, land scarcity and limited availability for landfill sites make AnaeCo’s technology particularly appropriate for the processing of MSW; it significantly reduces the level of MSW that ends up in landfill. With fiscal and legislative drivers European Waste to Energy (WtE) revenues are projected to increase from US$1.8bn in 2005 to US$2.7bn in 2010. In Denmark, Sweden and the Benelux, incineration of MSW has been used to generate electricity and heat for many years, while in the UK the recovery of energy from waste has been held back by cheap available landfill space and (partly) by public fears over alleged health effects. Facility commissioning in Perth will provide a demonstration site for the technology and for prospects in the UK and European markets. Commissioning of the DiCOM process is expected to commence at the Western Metropolitan Regional Council (WMRC) transfer station in August 2008. The project was initiated in September 2007 and is progressing to time and budget with mechanical completion forecast for completion at end-July 2008. Ambrian is initiating coverage of AnaeCo with a BUY rating and a target price of A$0.50 (25p). AnaeCo is listed on the ASX (code ANQ).
ANQ Price at posting:
0.0¢ Sentiment: ST Buy Disclosure: Held