Who's left standing?, page-12

As per the announcement to the market on 28 April 2017 – specifically the Appendix 4C quarterly cash flow report:

https://hotcopper.com.au/posts/24344145/single

“Commercialisation activities at NewCO2Fuels continue to make progress, including in respect of the upcoming commercialisation agreement with Sinopec Engineering (Group) Co Ltd. We anticipate further progress in this regard in the near term, whilst further partnership opportunities across Europe also continue to progress.”

As well as an interview with Alan Kohler (who is also an investor in VIV and NCF) on 24 April 2017:

https://theconstantinvestor.com/turning-off-lights-goes-beyond-saving-money-creating-profit/

Okay let’s talk about your Israeli investment of CO2 to fuel. What fuel does it turn into?

NCF, or CO2 fuels effectively takes carbon dioxide or CO2 and water, H20 and using waste heat or solar energy, turns it into syngas. Syngas is the precursor to methanol or diesel fuel. You can also turn it into urea plastics. The list goes on. If you wanted to, you could take syngas and blend that with natural gas. It’s got a higher calorific value than natural gas. So therefore is arguably worth more.

Right. So how is this going to turn into revenue? And how close is that to happening?

So that business is probably 2 to 3 years away from actually generating revenue. It was a technology investment. We’ve got some really exciting things happening with a company called Sinopec.  Sinopec was the second biggest company in the world. I don’t know quite where it’s at today. I think it’s market cap was north of $700 billion. We’ve currently signed a term sheet with them to commercialise the technology in China, which is probably 40-60% of the market. That’s progressing very well. Watch this space in relation to the final commercialisation agreement, but once that happens, that’s probably 12 months of building and developing the demonstration plants in China before it’s formally rolled out.

Does it clip on to or attach to a plant such as a power generation plant, that generates CO2 and it just takes that and turns into fuel? Is that the deal?

Pretty much. It’s a modular system. So it’s very malleable from that sense. You can effectively develop the number of modules you need for the size of the plant. What it does is it takes all of the waste products, being the CO2 and evaporation of H20, along with waste heat. So if you look at a coal fired power station. When the power station’s running, you’ve effectively got CO2, H20 and 1000 – 1500 degrees of waste heat and quite a few other nasties that are coming out through the flu stacks. They have to scrub the nasties anyway. And then the C02 and the H20 evaporate into the atmosphere. And waste heat is literally pumped up through the flu stack.

So we would take the CO2. We would take the H20. And we would take the waste heat and turn that into liquid fuel. Now they could choose to either put that back into the coal fired power station in this example or they could sell it or bottle it or do something else and pump it down the line. It’s not perpetual motion. It won’t just keep churning through the coal fired power station but that’s one example of how it could be used. I think there’s many other ways we are working with many other companies at the moment. One is gas wells. When you drill a gas well in the middle of Australia, three things come to the surface. CO2, H20 and natural gas.

So we would take the CO2. We would take the H20 and by using solar in the middle of Australia, we could make syngas which is more natural gas. So it reduces all the emissions into the atmosphere, but it makes that fuel well, a substantial gas well, substantially more profitable. There’s no shortage of ways on which it could be bolted on, whether it is a concrete plant. Whether it’s a steel manufacturing plant, it continues to be very interesting for a lot of different heavy industry players.

So are you at the point, or are they at the point where you know that it works?

Yeah. So it’s been proven at scale in Israel. In both a solar field and effectively within the Weizmann Institute, is the partner we’re partnered with. The Weizmann Institute are effectively a similar party to the CSIRO, but in Israel. So it’s been proven there. What we now need to do is scale it up. So that’s what the demonstration plant will be in China.

So you don’t really know that it works at scale because you haven’t done it.

That’s a good question. One of the reasons I really liked the technology when I first saw it, probably 4 years ago was what they’ve built it at a modular level. So to build a glass is very easy. To build a glass that you can drink out of the size of the Rialto, here in Melbourne is very difficult. What they’ve done is actually built a modular system. So they’ve proven the glass and now they just need to make more and bolt it onto a live operating facility. Which is the demonstration plant. So we’re reasonably confident. I can’t sit here and tell you it will be a walk in the park but it’s certainly proven at a scale that gives us confidence. And obviously Sinopec wouldn’t be at the stage that they are at if they didn’t believe it had the potential either.