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Originally posted by SP3
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Surges, you posted a very narrow view of the ECT business case, almost treating ECT like Peabody or a tobacco company. The recent AGM Chairmans address is a good read to address many of your concerns. You make zero mention of Victoria or the main game Matmor. Tell us what environmentalists/financiers/brokers wouldn’t like about Matmor? You said: “The ALDP disaster has seen share register dilution in massive proportions. What about the Greenard Willing R&D $200m fund that ECT hope to get $30m from? Apparently 45% was mentioned as claimable. Imagine spending $30m on Coldry CDP/ Matmor, and then get $13m back. I’m very confident brokers will welcome that. approx $24m obtainable via already in the money oppies? . Do you think any debt finance will be difficult if necessary with these Government monsters onboard? I don’t see any dilution coming to build the CDP or progress Matmor. It will very likely be the $30m R&D with oppies the back-up. Both ALDP recipients CEA and Ignite are similar beasts, they are almost worthless without an economic drying solution. CEA has stated Coldry is the answer and I’m convinced Ignite feel the same, hence the below statements from the AGM: “we are undertaking a Techno Economic Feasibility study on an integrated Coldry plant here in Australia. This plant is intended to act as the primary gateway for further utilisation of Latrobe Valley lignite by other enterprises . We have also started feasibility on upgrading the Bacchus Marsh Pilot Plant to become a high volume test facility to not only support global sales of Coldry and Matmor technology but to meet small commercial contracts for supply of Coldry pellets into the Victorian market. This marks the transition point from our company being a purely technology development company to one that seeks to monetise those technologies into earnings and cash accretive activities .”successful trials in prospective customer boiler systems” IMO the likely scenario is ECT secure debt finance to upgrade the BM plant to service supply contracts for local use. No dilution. Say ECT demonstrate Coldry profitability to the tune of $800k - $1.5m pa. That is a huge step forward . Who would be watching this factual demonstration of a commercial Coldry operation? The Victorian Government has always been very concerned about the “risk” regarding investing in lignite drying techs. The risk would be gone. Gone. EnergyBrix is gone and the Vic Govt needs something to fill the void. Enter Coldry imo with the Vic Govt largely paying for it . http://www.openbriefing.com/OB/Environmental-Clean-Technologies-Limited/2011/2/21/CEO-on-Victoria-Coldry-Project-and-first-Coldry-Sale/361.aspx “We’ve operated a 15,000 tpa pilot plant in Bacchus Marsh, Victoria for about five years. The plant has proven up the ability of the technology to turn brown coal into a black coal equivalent.” That was from 5 years ago, so Coldry has been produced for 10 years now. I’m not sure of the capacity now, but let’s say the upgrade just modernizes the existing capacity and introduces more efficient energy for drying etc. 15,000 tpa . Running this as a commercial operation for a year or so will imo no doubt convince the Vic Govt, CEA, Ignite etc that the economic lignite drying solution has finally been found . less than A$20m hope ” of “something ” positive happening. By giving ECT $20m the “hope” element is gone. No-brainer imo. There will likely be some Government scheme like the Innovation one to finance/subsidise it. Initially it would be for the firing of boilers etc, but the main Victorian game will be the Coldry integrated pyrolysis project, generating a high-value product for blast furnace heat generation ” Techno Economic Feasibility study on an integrated Coldry plant here in Australia” is 200,000 tpa. And who’s to say Matmor doesn’t fit into Vic somewhere. So Surges, The “ALDP disaster ” as you put it has been a masterstroke for ECT and I believe dilution will be near nil. Brokers will love it. Proven commercial status while probably constructing the Coldry CDP in India at the same time. Brokers like a diversified company, and risk will be divided between Victoria and India. Surges, you also said: “So whilst some holders expect blue sky potential, broader market is becoming increasingly cautions due to the isolated position of the Indian delgation in Paris. ECT is not Peabody or a tobacco company, it’s a company that aims to a) Via Coldry significantly raise the calorific value of Indian lignite and significantly reduce emissions, b) Via Matmor utilize Indian lignite/low grade iron ore to produce iron. You completely disregarded Matmor which many see as the ECT main game which really nullifies your post. http://theconversation.com/explainer-how-the-oecd-agreement-deals-another-blow-to-coal-worldwide-50969 “The Organisation for Economic Co-operation and Development (OECD) countries have agreed to limit subsidies for the export of inefficient coal-fired power plant technologies. Export credit funding will be limited to coal-fired power generators using only the most efficient, and least polluting, “ ultra-supercritical ” technologies .” Lets talk about boiler efficiency . Presently nearly all Indian boilers are subcritica l (34 % efficiency). India recently said all future boilers will be supercritical (38 % efficiency) or higher.finance ultrasupercritical43 % efficiency). Now the OECD see a massive difference between 34% and 43%, the difference is so great to them they are prepared to finance USC coal fired power stations . India are so far most looking mostly at supercritical (38%), but with the recent OECD offer its possible India will move on to plenty of USC.from Westpac a couple of days ago regarding funding new coal projects. http://www.theguardian.com/environment/2015/dec/11/westpac-will-not-rule-out-investing-in-coal-projects-if-they-fit-our-criteria “We believe in the science of climate change and we absolutely believe in trying to limit global warming to two degrees, that is a given ... [but] it’s very difficult for us to conceive of a situation where a scientist would say: ‘That particular project will take us over the edge.’
Surges, there are degrees of everything, nothing is black and white and Westpac just hit the nail on the head. They are
still prepared to finance conventional coal projects , so I’d imagine they and just about any other bank in the world would finance “cleaner” coal projects like Coldry/Matmor if the economics lined up. Have a look at some of the YES Bank quotes regarding just Coldry, below is one:
“Given India’s large demand supply mismatch of thermal coal, the Coldry technology offers an efficient and cost effective solution to utilize the 43 BT (est.) lignite reserves of India efficiently to bolster the energy security of the country while mitigating any adverse impact on the climate .” YES Bank Ltd, India. selective new coal projects going forward, and no doubt “cleaner coal” will be priority if it’s commercially proven. Coldry = Win Win. Paris regarding it’s negative influence on ECT. India proposes to double coal burning to 1.5 billion tonnes of coal production by 2020. NLC aim for about 18,500 MW by 2025. Kogan Creek power station in Qld is a 750 MW supercritical boiler burning 2.8mtpa black coal. So for 18,500 supercritical NLC will need roughly 70mtpa Coldry BCE. Now 70m of India’s 1500m is probably not huge in Paris’s eyes. Sure, a lot of the 1500m will still be subcritical (is around 750m now…about 90% subcritical), but you get my drift. by far the largest efficiency gains any power station(s)/coal mine(s) in India will ever see . Isn’t Indian coal efficiency/emission reduction absolutely central to Paris? Easy to see why YES Bank/NLC are so enthusiastic, lignite to BCE and subcritical to supercritical. Onlymoney recently posted that NLC are already searching for lignite deposits to buy. Now WHY do that when it is now mandatory that all new power stations must be supercritical or USC meaning calorific value must be 5000-6500? Why buy lignite that can’t be burned in a few years and NLC already have tens of billions of tonnes?? The only explanation is NLC are indeed extremely confident their lignite will be BCE in a few short years .
http://www.abnnewswire.net/press/en/56108/Environmental_Clean_Technologies_Limited_(ASX:ESI)_More_Success_With_Matmor_as_Mongolian_Sub_bituminous_Coal_Is_Put_To_The_Test_.html Surges, you didn’t mention Matmor . How would Paris negatively affect Matmor? Compared to tradition iron making - “ Significantly reduced emissions are estimated as much as 50% of a standard steel making plant ”. Isn’t Paris all about reducing emissions? Now potentially reducing iron making emissions by up to 50% is simply revolutionary stuff and obviously what all parties at Paris desperately want . What about Matmors potential for tailing dam management (eg BHP/Brazil disaster)? Feedstock costs are estimated at 30-70% less than traditional iron making. Capex 50% less. Paris gets excited about relatively minor efficiency increases/emission decreases – these figures are simply breathtaking. . NLC/NMDC now need ECT just as much as we need them. It’s so interesting that the world’s attention is firmly on Indian coal usage from now on indefinitely and microcap ESI (with Australian High Commission/Austrade backing) is on the verge of signing a binding Paris is resigned to that now. What Paris now wants is for India to reduce its coal and steel emissions/increase power station efficiency by as much as possible as quick as possible. Surges – seems you believe ECT will be “on the nose” with investors going forward – dilution out of control. I believe the exact opposite. I also think the BM upgrade will be a masterstroke. Let’s see. –
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SP3, yours was a very good post however para 6 should be corrected. Ignite's Cat-HTR process does not require pre-drying. In fact, water is added to make a pumpable coal/water slurry. Ignite is not considering Coldry or any other pre-drying system for its ALDP project. On the other hand, CEA will use pre-drying as it is necessary for its particular pyrolysis process.
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