Chairman's Address to Shareholders
Melbourne, Nov 30, 2018 AEST (ABN Newswire) - Environmental Clean Technologies Ltd (ASX:ECT) provides the Company's Chairman Address to Shareholders.
Welcome Fellow Shareholders,
I'm pleased to be reporting to you after a significant year of development for our Company.
It's been a long road for the Company and you all, our shareholders, however we've made several important advances in the past year which will be touched on here and in the following presentation.
Notably, on 30 May we signed the MOU which set the direction for the largest ever research and development (R&D) collaboration between Australia and India.
And while the past year has entailed additional layers of process as we reach 'financial close', shareholders will recognise that to be successful in India requires a high level of on-the-ground engagement and disciplined diplomacy, in addition to patience with polite persistence.
India has been our most important objective and for that we make no apologies about the focus and concentration of resources we have directed to finalising this initiative. Delivering on our promised first deal is critical to all other initiatives going forward and sets the baseline for management's ability to India is full of opportunity - growth rates of 8.5%, one of the largest populations in the world and the largest population of young people under 25, who are highly educated, speak fluent English and will become the middle-class consumers that will drive India to being a powerful consumer market to rival China.
Despite this, there are necessary reforms yet to take place, which still make it a complex place to do business as a foreign company. But this is changing, and we are seeing the effect of reforms like GST, and changes to insolvency and bankruptcy laws in India which evidence that the Government has the will to change and following suite are companies like NLC and NMDC showing great dedication towards global best practise in many areas of how they do business.
With that in mind, this year's strategic objectives have been guided by the following themes:
1. Evidence Adoption - Apply our technology to commercial projects
2. Secure Value - Improve our development and protection of our technology
3. Demonstrate Value - Reach operational revenues to underpin the economic sustainability of 1 & 2 above
Consistent with our 3-year strategic plan, our objectives cover:
1.1. Commercialise the Coldry technology
1.2. Commercialise the Matmor technology
2. Innovation and Market Development
2.1. Continual development and leverage of existing technologies
2.2. New and evolving technologies and markets
3. Corporate Capacity and Capabilities
3.1. R&D program management & administration
3.2. Capital, finance and resource management
3.3. Communications, marketing and stakeholder engagement
3.4. Governance, risk and compliance
This has manifested in the following key result areas:
1. Progressing our Indian project and making way for feasibility of new projects.
2. Improving large-scale R&D capability and processing efficiency at our Bacchus Marsh facility
3. Developing markets with near-term revenues for our products and projects
4. Restructuring the organisation and right-sizing roles and responsibilities
5. These key result areas (KRA's) and the relevant Key Performance Indicators (KPI's) of each staff member, give us the day to day focus as we embark on the challenge of meeting our strategic objectives.
This world-first collaboration involves the joint development of our Coldry and Matmor technologies via a research and development (R&D) project in India to the value of ~AUD70M.
The objective of the project is to successfully deploy a pilot scale integrated Coldry-Matmor plant as a prelude to broader commercial rollout in India and globally.
Our partners in the project, NLC India Limited (NLCIL) and NMDC Limited (NMDC) are Indian government public sector undertakings (PSU's) with a combined market value of ~$10 Bn.
NLCIL is India's lignite (brown coal) custodian, with an extensive mining and power generation portfolio.
NMDC is India's largest iron ore miner and the 10th largest iron ore miner in the world, producing over 35 million tonnes in 2017.
NLCIL and NMDC will each contribute 50% of the ~AUD30 million project capital cost in return for a 51% stake in the project entity.
As we stand today, with NLC board approval in hand, we await the NMDC board approval after which our India project is poised to proceed through to 'financial close' upon signing of the detailed Research Collaboration Agreement (RCA).
Following 'financial close' our partners, NLCIL and NMDC will release funding in parallel with ECT providing the Project Bond and the project will commence, ushering in the transition from project development, to project execution.
We all agree that delivering this project has been the most important objective for our Company, and the team has worked diligently to achieve this outcome.
Bacchus March High Volume Test Facility (HVTF)
Our facility, located 50km northeast of Melbourne on the outskirts of the town of Bacchus Marsh, has been the focus of our fundamental and applied research and development for both Coldry and Matmor since 2006.
Its importance has continued to grow over the past year, with ongoing testing and improvement of our technologies. Our facility not only allows us to generate new knowledge, it also allows us to do so in an environment where we have a high level of control and protection over the test work that leads to new discoveries and future value.
Our Coldry facility has been re-engineered to be productive and efficient enough to provide the closest approximation we can currently achieve at small scale, of a commercial application of Coldry, with the intention that the resultant product from our research and development activities is able to be sold as solid fuel into end-user demonstration projects and other commercial customers.
Progress with the Bacchus Marsh plant and the subsequent delivery of our R&D programs ensure that the intellectual property that we currently have under patent protection will be rigorously tested and continually improved.
Our technology suite features vertical and horizontal integration across our proprietary processes and equipment. This approach is intentional, allowing us to develop further intellectual property within the protective framework of our pre-existing technologies and know-how.
The Bacchus Marsh HVTF provides the essential infrastructure and apparatus to further develop and refine our intellectual property through on-going R&D as well as prepare for, and support, data collection and project specific designs for future demonstration and commercial projects.
Over time, our research has led to the accumulation of a more sophisticated and detailed understanding of underlying processes which has, in turn, led to new intellectual property, particularly around the Packed Bed Dryer (the 2012 Design for Tender program with engineering firm Arup).
More recently, the innovation process has led to new discoveries around the chemical reactions underpinning Matmor, resulting in two new technologies; HydroMOR and COHgen.
HydroMOR is the subject of an international patent application (PCT) lodged last November (2017), while fundamental research activity has commenced on our newest discovery, COHgen, with the aim of lodging a provisional patent in due course.
As we head into 2019, our HVTF continues to provide critical support to our R&D programs that will allow us to continue pursuing IP protection as we develop our technologies.
Developing markets for our products and projects
Supported by our ongoing R&D effort, and consistent with our commercialisation strategy, ECT continued a period of establishing operational revenues to underpin the feasibility of our technology suite.
Last year we began developing markets that have near-term potential for generating operational revenues.
Over this period, in tandem with the upgrade programs at the HVTF, we developed a pipeline of sales leads, culminating in our announcement during July of a $1.3 million five-year deal to provide a turnkey solution for 'steam services' for a Victorian customer.
The deal includes the end-to-end delivery of steam including ongoing operation and maintenance. Importantly, it will run on Coldry solid fuel produced from our HVTF at Bacchus Marsh.
We're currently engaged with several other existing and potential customers to develop a similar solution and anticipate that over the coming year, we will continue to develop local opportunities, improve our operational capabilities and establish contracts for the supply of solid fuel pellets and turnkey boiler and steam solutions.
Building on our endeavours in the local market for utility-scale heat applications, the economic landscape in Victoria has become increasingly conducive to larger scale deployment of our Coldry technology, justifying further exploration of the broader market.
Last year (September 2017) we commenced the early stages of a feasibility study for a commercial scale, zero emissions, solid fuel pellet (Coldry) demonstration plant in the Latrobe Valley. We partnered with the owners of Yallourn mine and power station, Energy Australia, narrowing down the site options and identifying integration requirements. This led to a compelling business case, providing a clear path for increased capacity beyond our HVTF.
Progress on this feasibility study was suspended whilst we dedicated resources to completing the India deal but as was announced on the 28th of November, we have restarted the next stage of feasibility. If a project were to proceed on the basis of this feasibility, it would become the largest, most environmentally friendly, economical gateway to upgraded brown coal in Australia and with the current State Government policy statement of the "Future Use of Brown Coal", ECT is in a good position to test Coldry's application on our local market.
A Coldry plant in the Latrobe Valley would aim to not only improve energy affordability and reliability to businesses threatened by rising electricity and natural gas costs, but also help realise the potential of brown coal in Australia for prospects such as High- Efficiency Low Emissions (HELE) power plants, low emission hydrogen production, fertiliser production and other downstream chemical conversion methods.
As we approach 'financial close' for our India project and advance local market opportunities we look forward to continuing all these efforts through 2019 and on behalf of the board of directors, executive and staff, we thank you, our shareholders for your continued, invaluable support.
To view the AGM Presentation, please visit:
About Environmental Clean Technologies Ltd
Environmental Clean Technologies Limited (ASX:ECT) is in the business of commercialising leading-edge coal and iron making technologies, which are capable of delivering financial and environmental benefits.
We are focused on advancing a portfolio of technologies, which have significant market potential globally.
ECT's business plan is to pragmatically commercialise these technologies and secure sustainable, profitable income streams through licencing and other commercial mechanisms.