AnaeCoInitiating CoverageAnaeCo is an Australian-based and...

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).