Consol Energy Press Release, page-4

https://www.post-gazette.com/business/powersource/2020/01/09/Consol-invests-in-alternative-use-for-coal-It-s-part-of-a-diversification-strategy-to-invest-a-little-and-hope-that-something-takes/stories/202001090082

Cecil-based coal producer Consol Energy Inc. is adding to its portfolio of small, early-stage investments that could potentially lift coal out of its doldrums.The company announced its 25% equity interest in CFoam Corp., a subsidiary of an Australian firm whose business is to commercialize a coal-based structural material developed in a research lab in West Virginia.CFoam has been making the hard but lightweight and porous material in a facility in Triadelphia, W.Va., while the parent company trades on the Australian Stock Exchange.Consol’s investment of $5 million also includes a $1.1 million loan to CFoam and secures the coal company half the seats on CFoam’s board. Anya LitvakConsol says the market will gobble up as much coal as it can produceConsol CEO Jimmy Brock said in a statement that this investment represents a “pathway to diversification.”While both demand for and public approval of coal-fired power generation have declined in the past half-dozen years — much of it driven by competition from a glut of cheap shale gas — using coal in noncombustible applications could find coal companies another market. Many coal players have filed for bankruptcy in recent years, some several times, although Consol never has.Consol’s bread and butter is its Pennsylvania Mining Complex, which has three mines and produced about 27 million tons of coal last year. The company is also developing a new mine in West Virginia to extract coal that would be sold to steelmakers.About 30% of Consol’s coal is slated to go abroad.The markets for CFoam’s products include defense, aerospace and industrial.When Consol was negotiating the deal in the fall, it was going to invest $1.4 million and take a 10% equity interest in the company, in addition to a $1.1 million loan.Around the same time, CFoam got a new president and CEO: Flemming Bjoernslev, who lives in Pittsburgh. Mr. Bjoernslev formerly served as president and CEO of Lanxess in North America. Diana Nelson JonesPentagon request could boost rare earth mining industry in U.S.By the time the agreement was finalized in early December, Consol’s investment and equity stake had more than doubled.Consol once prided itself on its research and development efforts. For half a century, it operated an R&D facility in South Park, where it explored technologies like coal liquefaction and making construction materials out of waste coal.That R&D complex closed in 2016.At the same time, over the past year company leaders have been touting efforts to invest in technologies that could bring coal to new markets.“By their very nature, (such) projects involve a technical collaboration and have long gestational periods,” Mr. Brock told analysts last year. “We currently have several of these in the pipeline.”He mentioned the Omnis Bailey project, an effort to build a solid-fuel refinery to process the fine bits of coal left over from Consol’s cleaning process.“Our initial spend on such projects is relatively modest,” Mr. Brock said, “but could grow significantly once certain milestones are achieved. If one of them achieves its full potential, it could be a home run.”David Khani, who was Consol’s CFO at the time — he left earlier this month to join EQT Corp. — added that these investments have the potential to be “meaningful to our bottom line within two to five years.”Omnis built a pilot plant in 2017 but, according to Consol’s corporate responsibility report, released in June, the project was still in “the early stages of development.”In August, Mr. Brock told investors that the first commercial-scale module was supposed to be completed by the end of last year, with start up slated for “the first part of 2020.”He said the project, if successful, would help reduce the company’s environmental footprint and bring in new revenue.A number of universities, government agencies and startups have ramped up development of non-combustible uses of coal in recent years, in part because such research now has a friendlier ear in Washington, D.C.For example, Steve Winberg, a former Consol Energy executive, is now assistant secretary for fossil energy at the Department of Energy. The DOE has funded a number of these initiatives, including efforts to extract rare earth minerals from coal — something Consol has said it is also exploring.The company is also involved in a DOE-funded partnership with researchers at Ohio University to make building products from coal plastic composites.