Environmental Clean Technologies Limited (ASX:ECT) Chairman, Glenn Fozard discusses the company's key technologies Coldry and Matmor and its Indian Matmor Pilot Plant timetable.
Jessica Amir: Hello Jessica Amir here for the Finance News Network, with Environmental Clean Technologies Limited (ASX:ESI) Chairman, Glenn Fozard. Glenn welcome to the Network.
Glenn Fozard: Thanks Jessica.
Jessica Amir: For new investors, just give us a quick introduction?
Glenn Fozard: Environmental Clean Technologies commercialises innovative technologies for the low-rank and low-grade resource space. What we particularly do is derive value from environmental, or environmental value and economic value. That’s focusing on low-rank and low-grade resources like lignite, which is brown coal and iron ore fines, for example. To date our company has been pre-revenue. Necessarily that’s been because we’re focussing on the development of these technologies, and the patent protection of those technologies.
As it stands today, we’re market ready and we’re about a $90 mil cap. A few years back, we identified a gap in the market, a services gap. And that’s allowed us to recognise that there’s companies out there now, resource companies, that are willing to adopt technologies that are low emission and emission free technologies, to apply to their current conventional resource program. So our stated purpose at ECT (ASX:ESI) is to bridge the gap between today’s use of resources, and tomorrow’s emission free future.
Jessica Amir: Now to your technology in a little bit more detail. Just tell us about Coldry?
Glenn Fozard: It’s essentially a low-rank coal de-watering process. It uses low temperature to de-water the coal, using waste heat. So it’s quite a cost effective method of de-watering coal. And what it creates is a high energy, solid fuel pallet, not too dissimilar to something like that. Additionally, the part of the unique characteristics of Coldry is that it doesn’t produce any CO2, direct CO2 emissions. So it has the features of being both economically compelling and environmentally friendly.
We say at ECT that it is the most, the world’s most efficient means of de-watering brown coal. Now even though we say it, what is important is that no one else has proven otherwise. So we not only have the most efficient method, but given that there is no CO2 emissions, we have quite a compelling technology that is well aligned, to the broader global environmental trend.
And so our other technology is Matmor. Essentially Matmor is a hydrogen-based primary iron production process. Its features are that it uses cheaper feedstocks, as well as lower temperature and residence time inside the Retort. Matmor is coupled really well with Coldry. So a Matmor plant will be built alongside a Coldry plant, and Coldry will act as the feedstock preparation, where it combines lignite with the iron ore. And then it will pass through the Matmor Retort. The fact that it uses low temperature and low residence time, and that has a direct relationship to low emissions. Through that process we end up producing, what we call primary iron from Matmor and this is in fact, a Matmor piece of primary iron.
Jessica Amir: You’re in the final stages of designing your pilot plant. How’s it going?
Glenn Fozard: It’s going well, we’ve almost completed the full design package. From there, we’ll also be developing parallel additional points of the project execution plan. Things like pre-tendering for EPC and OEM providers. That’s with the intent of eliminating as many obstacles, so we can reach construction as soon as possible. One thing that is really important to understand in this agreement that we’re signing, the Master Project Agreement, is that it’s the largest ever R&D collaboration between Australian and Indian companies.
Jessica Amir: So why India and who are your business partners there?
Glenn Fozard: India was a logical choice for us; they have vast lignite reserves owned by NLC India Limited (NSE:NLCINDIA). They also have increasing supply of waste iron ore in slimes and finds, as they call it. Our Indian partners NLC India and MNDC Limited (NSE:MNDC), they’re at a combined market cap of almost $10 billion. And NLC is the custodian of most of India’s vast lignite reserves and MNDC is India’s largest iron ore miner.
To us, they’re the perfect partners, they represent significant balance sheet that can support us, in our drive towards commercial rollout globally. Importantly, they also have the will to expand. And additionally and I think the most important thing, is that through the MPA that we’ve drafted now, they also have the economic incentive in the royalty share that we’ve agreed to.
Jessica Amir: Now to finances. Just give us a quick snapshot and include a summary of what’s going on with licences, and also revenue?
Glenn Fozard: Building our revenue model on four pillars, the first pillar is product sales. And that’s based on the earn whilst you learn principle, whereby we find markets for the products that we produce, as we continuously improve and undertake R&D. The second pillar is royalties and licence fees, and that’s a logical extension of the actual projects that we rollout commercially. The third layer is the project management fees, that’s a bit shorter lead-time. That allows us to earn revenue from supporting the project execution, through to completion. And finally is the longer term one, which is the asset ownership.
Jessica Amir: Lastly Glenn. Why should investors be adding ESI to their portfolio?
Glenn Fozard: I think ECT provides good exposure to resource technology. It’s at a pretty interesting time for investors; we’re going from pre-revenue into revenue growth, supported by patented technologies. Most patented technologies are both economically compelling and environmentally friendly. Additionally, a unique characteristic I think of the exposure, is the exposure to the India growth story. And it’s something that I think will rival the China growth story, in the next couple of years.
Jessica Amir: Glen Fozard, thank you so much for the update.
Glenn Fozard: Thank you Jessica.