Legally binding? ......Satin
Binding Agreement with NLC and NMDC secured
Date: January 27, 2016
Environmental Clean Technologies Limited (ASX:ESI and ECT or Company) is pleased to announce it has secured a binding agreement to proceed with project development initiatives for its Coldry and Matmor technologies with India’s national lignite authority, Neyveli Lignite Corporation (NLC) and India’s largest iron ore miner, NMDC Ltd.
Key Points:
- Australian technology development firm strikes world-first collaboration agreement with two Indian resource majors, underpinning joint R&D efforts
- Innovative Coldry and Matmor technology suite poised to upgrade low grade coal and iron ore resources, reduce emissions intensity
- Capital management planning positions Company for next phase of project development activity
Binding Agreement Reached
The agreement, which paves the way for the development and joint financing of an integrated Coldry Demonstration Plant and Matmor Pilot Plant at India’s largest lignite mine, was signed on Tuesday 19 January 2016.
ECT’s Managing Director Ashley Moore stated “This is a significant step forward for our business. We have been working toward this outcome for some time now. To bring India’s leading lignite and iron ore players together under a tripartite arrangement, to jointly pursue the development of innovative solutions to help tackle some of India’s strategic economic and environmental challenges, is a first for the parties and, to the best of our knowledge, a first for an Australian company.”
NLC’s Chairman and Managing Director, Mr S. K. Acharya delivered a forward looking speech during the signing ceremony, outlining his company’s vision for moving its lignite resource up the value chain and mitigating emissions. He commented specifically that, as the process is suitable for purifying iron from the low grade iron ore, using easily available lignite, the exchange of technical know-how between India and Australia will benefit the companies as well as the countries.
NMDC welcomed the agreement, highlighting their previously stated drive to develop alternatives to metallurgical coal which is in short supply, and to ultimately reduce dependency on imported coking coal.
India has an abundant above-ground iron ore resource in its mine tailings, however the fine size of the tailings means they are unsuitable for blast furnace use, effectively ‘stranding’ this resource and creating a growing environmental challenge. The problem to date is there have been no metallurgical applications that can cost-effectively upgrade such tailings. Matmor has the potential to deliver an innovative solution to this problem as well as improving India’s self-sufficiency through less reliance on coking coal.
Mr Sean Kelly, Australia’s Consul-General for South India (pictured centre left) kindly attended the signing ceremony, supporting the Company’s efforts in India and highlighting the opportunities for all parties. He noted in a subsequent media release:
“An Australian company has forged an important new partnership under Indian Prime Minister Modi’s ‘Make in India’ initiative to deliver unique Australian technologies which enable India’s abundant lignite coal to be used for electricity and steel production, while at the same time minimising CO2 emissions.”
“This exciting Australian innovation further reinforces Australia’s position as India’s pre-eminent energy partner,” Mr Kelly said, “while at the same time helping India reduce the carbon intensity of its rapidly growing steel industry that depends on coal.”
“It is also a tangible example of the scope for Australians to bring their world-class technological innovations to India, adapting the technology to suit local requirements and working alongside Indian partners, resonating with [the] Indian Government’s ‘Make in India’ initiative” Mr Kelly said.
Link: Media Release, Australian Consulate-General, Chennai, India –
http://chennai.consulate.gov.au/cnai/Media.html.
Market Context
- Economic trends: India has overtaken China as the fastest growing economy and is predicted to maintain this momentum through the next decade. Its ‘open for business’ mantra, vision for sustainable growth and reputation for frugal innovation are gaining widespread traction, attracting companies like ECT.
- Keeping it clever: The Australian Government has launched its ‘National Innovation and Science Agenda’, promoting innovation at home and abroad. ECT seeks to innovate across the energy and resources industries, where the desire for economic growth and the need for sustainability often come into conflict. Both NLC and NMDC are focused on developing alternative processes in their respective fields.
- Climate security: The recent Paris Climate Conference delivered outcomes intent on achieving meaningful emissions reductions generally, with India specifically committing to significant reductions in emissions intensity. Coldry, as a zero net emissions technology for quality improvement for low rank coals, and Matmor’s capacity to significantly reduce CO2 emissions during the production of crude steel provide significant contributions to this effort.
“This backdrop is highly supportive of such a collaborative approach to innovation, starting in India and expanding the offerings to other geographies reliant on emissions-exposed industries,” said Mr. Moore, adding “We look forward to working with such highly regarded and capable companies as NLC and NMDC to deliver solutions focused on the upgrading of their domestic resources in India’s national interest.”
ECT Chairman, Mr Glenn Fozard (pictured, right) added, “We must also acknowledge our in-country business adviser YES BANK. Doing business in India is challenging and their support has been instrumental in navigating the complexities.”
“Thanks must also be extended to the Australian High Commission and Austrade for their assistance with engaging India’s National Government over the past 12 months.”
This agreement validates the company’s strategy with regard to selecting India as the launch pad for its technologies and is arguably the single most important milestone delivered for shareholders in the Company’s history. It is the fulfilment of a crucial step in the Company’s previously announced India strategy which has been built on a confluence of factors. These include India’s reputation for frugal innovation, its abundant lignite resources, energy challenges, limited domestic coking coal, concerns around national resource and energy security and the political and business impetus to tackle these challenges in sustainable and innovative ways which have created supportive market conditions.
The Company will provide further updates as activities progress.
Next Steps
This agreement forms the basis for the forthcoming project planning and execution activities and leads into the substantive project phase, aiming to commercialise both Coldry and Matmor in the India market ahead of potential broader global deployment.
The project development activities will proceed immediately with the assistance of world class engineering partners Thermax and MN Dastur supporting Coldry and Matmor initiatives, respectively.
The next major deliverable will be the techno-economic feasibility study projections for an integrated commercial plant, targeted for delivery mid-year, will provide sufficient refinement of the capital estimates and commercial projections upon which the parties will rely to finalise the funding mix and financial and commercial commitments.
In relation to the immediate next steps, Mr Moore commented “We have a busy time ahead of us as we execute and deliver on the plans set forth in the agreement, including key elements such as the pre-construction works for Coldry, together with the Matmor-Coldry integration aspects, as well as the scale up of Matmor from its current Test Plant size to Pilot stage.
“In relation to Coldry, these next steps will include the conversion of existing engineering drawings to suit local requirements, construction codes and available ‘steel sections’, as well as vendor development for supply of certain technology-specific equipment items. In fact, preparatory work has been underway with Thermax on this particular activity, with formal kick-off expected soon on the end-to-end works program.”
In relation to Matmor, Mr Moore added “We look forward to commencing the work with MN Dastur in coming weeks. This work program will involve significant activity to bring Matmor’s readiness in line with Coldry.”
Agreement Overview
The Tripartite Agreement is binding and establishes the collaborative framework to deliver an integrated Coldry and Matmor facility, providing high-level milestones and pivotal decision points along the development pathway.
The framework provides agreed pathways for key activities, broadly including:
- Detailed Integrated Techno-Economic Feasibility Study (parallel activity to 2 & 3)
- Coldry Demonstration Plant development
- Matmor Pilot Plant development
Successful progression through the activities will lead to a series of subsequent steps under the framework:
- Commercial structure agreements
- Financial Close
- Project construction
- Commissioning
- Validation & optimisation activities
- Operations
- Expansion
The Company will continue to own its Coldry and Matmor intellectual property, which will be licensed into the India project.
(20min delay)