Indian Government to ink largest Australian R&D agreement with Environmental Clean Technologies

Environmental Clean Technologies (ASX: ESI) has achieved a major milestone after locking-in a research and development agreement with two Indian public entities to develop a commercial “cleaner” alternative to making iron and steel, based on its proprietary technology.

The agreement is the largest ever research collaboration for India with an Australian company and comes under the existing Australia-India Comprehensive Economic Cooperative agreement.

A master project agreement will be officially signed in Canberra on 24 May 2018, with India’s NLC chairman and managing director Dr SK Acharya to head up the Indian delegation to Canberra, which includes senior executives of NMDC Ltd.

Coldry and Matmor plant

The agreement paves the way for the parties to develop the world’s first Australian-designed Coldry and Matmor plant in India’s Tamil Nadu state.

As part of the initiative, the parties will use Environmental Clean Technologies’ proprietary process, which creates steel and iron from lignite coal (brown coal), which is traditionally consumed in electricity generation. Using lignite coal in steel and iron manufacturing is expected have lower production costs and “significantly” less carbon dioxide emissions.

“Matmor represents the most significant departure from primary iron making since the advent of coke-based smelting in 1709,” Environmental Clean Technologies chairman Glenn Fozard said.

“By utilising a predominantly hydrogen-based pathway, Matmor enables the use of abundant, lower cost alternative raw materials and lower carbon dioxide emissions,” he said.

He added the parties believed Matmor could “revolutionise” primary iron making.

“Matmor’s ability to utilise alternative, lower cost resources such as iron ore fines and lignite to produce iron and steel helps to address the real-world issues faced by India as it strives to mitigate emissions intensity in the face of ambitious growth targets,” Mr Fozard noted.

The research and development component of the agreement is expected to cost about A$35 million, with NLC India and NMDC to fund 100%.

During this phase, Environmental Clean Technologies’ Matmor and Coldry processes will be scaled up to create an integrated Coldry demonstration and Matmor pilot plant, which will be tested for technical and economic feasibility at 2 tonnes of metal per hour.

If successful, the parties will develop a commercial scale facility with output capacity of around 500,000tpa steel.

The capital expenditure for a commercial facility is estimated at A$300 million, with the Indian partners to fund the project’s entire capital and operating costs.

A special purpose vehicle will be established with Environmental Clean Technologies to own 49%, NLC India to possess 25.5% and NMDC to retain 25.5%.

“Environmental Clean Technologies is very pleased with the final structure and funding arrangements as set out in the master project agreement,” Environmental Clean Technologies chief operating officer Jim Blackburn said.

“We believe this provides a strong and sustainable basis for delivery of the pilot plant project in India and a springboard into the future commercial pathway,” Mr Blackburn added.

The partners have pencilled site works to begin by August 2018, once funding has been completed.

By mid-afternoon trade, Environmental Clean Technologies’ share price had gained 5.56% to reach A$0.019.