ECT initiated the transaction so it can package up the Matmor technology – which uses brown coal as a reductant and heat source with a vertical furnace plant design that works with the natural chemistry of lignite – with its Coldry technology as a more attractive proposition for investors.

Based on research initially conducted by CRA Services and the University of Melbourne in the 1980s, Coldry changes the naturally porous form of brown coal to produce a dry, dense pellet via a “brown coal densification” process.

Coldry pellets can be used in local black coal fired power plants and transported safely over distance to black coal fired power plants; while a 10% to 30% Coldry/lignite mix can be used in existing lignite-fired plants to reduce emission by between 5% to 15% without modifying the plant.

ECT believes new state-of-the-art black coal power stations can cut emissions by 40% by replacing old, inefficient lignite-fired power stations.

The company believes economic, energy and climate security will drive adoption of the Coldry technology, especially as exports to thermal coal markets will provide a new revenue stream for existing brown coal mines currently only supplying mine-mouth power stations.

There is also the opportunity to diversify into new product streams, including coal-to-liquids and fertiliser (urea).

ECT chairman Glenn Fozard said the Matmor transaction, which could not have been done without IP owner Calleja Group’s full support, was structured so ECT would not need to raise capital to finalise the acquisition.

He said Calleja agreed to receive options (to the agreed value of $1 million) as the upfront consideration and recognised the future commercialisation value of both Matmor and Coldry technologies by accepting the residual payments from future cash flows for the $3.5 million cash part of the transaction.

Interest in the two technologies has growth out of the company’s “India strategy”, which addresses challenges around energy and resource, energy and environmental security.

“It has become clear through the company’s ongoing discussions with various parties that while the Coldry and Matmor technologies are individually attractive in their own right, the combined offering is a more compelling proposition, able to leverage lower value iron and iron alloys in addition to Coldry’s thermal coal product,” ECT managing director Ashley Moore said.

“Total ownership of the full technology suite will allow the company to take further advantage of the considerable interest being shown from companies in India and other countries.”

ECT announced in October it had concluded preliminary testing of several Indian iron mines with encouraging results, with the aim of pursuing a second phase of bench-scale, batch testing on those same iron ores to refine outcomes and “inform the selection of candidate inputs for subsequent test plant trials”

“Bench-scale trials require several hundred kilograms of raw materials, whereas the test plant trials may require tonnes of raw inputs and involve iterative development of the test plant as part of ongoing fundamental and applied research and development necessary to inform pilot and scale design,” ECT said.

The company is also developing commercial pathways, starting with “collaboration options” around both Matmor and Coldry technologies, to advance them to pilot and demonstration scale respectively.