Australia's Linc Energy plans China coal gasification and liquids JV
Sydney (Platts)--16Apr2012/625 am EDT/1025 GMT
platts.com
Linc Energy has agreed to form a joint venture to commercialize its underground coal gasification and gas-to-liquids processes in China, the Australia-based company said Monday.
The joint venture with GCL Projects, a subsidiary of Hong Kong-based Golden Concord Holdings, plans to begin building its first multi-gasifier project within six months of completion of binding agreements. Linc will hold 33% of the joint venture, with GCL taking 67% and providing $15 million as working capital over the first three years.
Linc has developed its UCG-to-GTL process over the past five years at a pilot project in Chinchilla in the eastern Australian state of Queensland. The company plans to grant an exclusive license to the joint venture for the use of its processes in China.
GCL will provide the joint venture with $5 million in working capital to start site selection and engineering for the project in China. GCL has also agreed to pay A$120 million ($124 million) for about 5% stake in Linc in two installments.
The placement will comprise a A$60 million first tranche on execution of the joint venture contract. A second A$60 million placement will occur when the first UCG operations in China are completed and commissioned.
"China's insatiable appetite for liquid fuels and gas presents Linc Energy and GCL with a unique opportunity to capitalize on this world changing market," said Linc CEO Peter Bond. "Importantly this relationship significantly revalues Linc Energy's key UCG-to-GTL technology base. Linc Energy is committed to commercializing UCG-to-GTL on a significant scale, and this most recent deal with GCL in China is the first stepping stone of many commercial opportunities I believe you will see Linc Energy produce over the months ahead."
--Christine Forster, christine_forster@platts.com
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Linc’s $124 Million Deal Highlights Clean Coal’s Eastern Promise
April 16, 2012, 4:06 PM HKT
blogs.wsj.com
For Linc Energy’s management, the equation was pretty compelling: combine China’s vast reserves of coal with cheap local capital and a potential silver bullet to climate change.
For shareholders who had ascribed little value to Linc’s potential in China, a joint venture with Golden Concord underpinned by the sale of a 5% stake in the company for 120 million Australian dollars (US$124 million), represents an unexpectedly big windfall.
Underground coal gasification—the production of energy by burning coal where it lies, deep below the Earth’s surface—has little profile in Australia but it’s increasingly big business in China where pollution is a burning issue. Thermal coal for use in power stations accounts for two-thirds of China’s energy mix, and the country continues to add the equivalent of the U.K. or France’s entire generating capacity each year.
Linc says Golden Concord will inject US$15 million of working capital into the joint venture, which aims to start building a UCG operation in China within six months of binding legal agreements being signed.
Gas produced through the process will be converted to liquid fuels.
“China’s insatiable appetite for liquid fuels and gas presents Linc Energy and Golden Concord with a unique opportunity to capitalize on this world-changing market,” said Linc CEO Peter Bond in a statement.
See more on this story at Deal Journal Australia |
