Dry coal method aims to clean up [06jul06]

A VICTORIAN company is preparing to launch a clean coal technology that could increase the value of the state's brown coal assets five-fold and cut greenhouse gas emissions from coal-fired power stations by as much as a third.Asia Pacific Coal & Steel has an agreement worth up to $680 million with American energy group Gastar to commercialise its coal drying technique.
The two companies will begin building a coal drying plant at Bacchus Marsh this year, with plans to export brown coal pellets to Asia by early 2008.
The technology can also be used to make low-cost steel and a 6000 tonne steel-making pilot plant is expected to be operating at the same site by May next year.
The State and Federal Governments declined to comment on the technology yesterday. However it is believed they are looking at it closely.
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APCS' Coldry technology reduces the water content in brown coal from more than 50 per cent to less than 15 per cent, making it more efficient to burn.
APCS claims the technique reduces the amount of carbon dioxide emitted when the coal is burned by as much as a third, which could provide a solution to one of the state's biggest dilemmas.
Victoria is almost totally reliant on brown coal for power generation.
New power stations would have to be built to take full advantage of the technology but APCS believes Coldry pellets could cut emissions from ageing power stations in the LaTrobe Valley by as much as 10 per cent when burned with unprocessed brown coal.
International Power, which owns the Hazelwood power station, yesterday confirmed it had successfully trialled the Coldry pellets as an auxiliary fuel, but stressed APCS had yet to prove its process worked with LaTrobe Valley coal.
The Coldry technique could also see Victoria's rich brown coal resources exported for the first time in what could become a billion dollar export industry.
Unlike unprocessed brown coal, Coldry pellets can be transported without the risk of combustion.
APCS managing director Pat Giles said the thermal fuel was at least equivalent to black coal.
APCS has already signed a deal with a company in Singapore and has recently hosted delegations from China and India.
"We're now going to be able to export $4 wet coal and turn it into a $60 commodity," he said.
The Coldry process can also be used to make steel, by blending wet coal with iron ore before the drying process. The pellets are then fed into a special furnace and melted to create molten steel.
Mr Giles said the company planned to build six steel-making plants around the country if the pilot was successful.
"This technology is going to allow us to add value to a commodity for the first time in Australia, without digging it up and sending it away at the lowest cost," he said.
An independent assessment by Melbourne's Essential Economics found the technology had the potential to increase the value of the State's brown coal resources from about $260 billion to more than $1600 billion. APCS recently completed a reverse takeover of listed vehicle Environmental Solutions International and is now trading on the Australia Stock Exchange as ESI. Its shares closed yesterday at 84. The company this week began final optimisation work on its 10,000-tonne coal drying pilot plant in Bacchus Marsh, which has been operating for the past two years. If testing is successful, Gastar has committed at least $30 million to build a commercial pellet plant.