- Coal is still a major source of electricity production in the world. By volume, coal use is still growing, even though you may hear that this is a dying industry.
- Cleaner and more efficient coal is more expensive than low-grade coal. Unfortunately, low-grade coal makes up most of what is mined today. The price difference can be 3-5X for a higher quality product.
- Clean Coal Technologies (CCTC) has a process that may make coal more efficient, cleaner, and cheaper to transport. The company has built a 40 ton per day pilot test facility and following successful "hot runs" in OK, has moved the plant to a permanent location in Wyoming and will begin to run test batches from prospective energy company clients in upcoming months. Previous companies in this space, which appear to have had inferior technology, were valued at $1 billion by the public markets years ago and they had partnerships with major energy producers - there is clearly demand for this kind of tech. Given CCTC's current $14M market cap (or $40M fully diluted), investors could be in for some spectacular returns if CCTC signs a commercial deal in the coming months.
- Good outcomes from Clean Coal's testing in 2018 or 2019 could make this unknown company worth substantially more. At a $14 million market valuation, CCTC is unknown in the public markets and an interesting high-risk high-reward energy company. The next 3-12 months could hold the key to unlocking major value for shareholders.
NEW YORK, NY / ACCESSWIRE / September 10, 2018 / Despite pronouncements in the mainstream media, coal and coal-powered electricity are far from dead, especially in parts of Asia where it provides most of the electricity used today. By volume, coal consumption is expected to increase for years to come.
A small company called Clean Coal Technologies Inc. (CCTC) is working to make coal more efficient, cleaner and cheaper to burn. The technology has been proven on a 40 ton per day scale, and from its permanent location in Wyoming is being reassembled to test the first larger-scale batches; a number of power companies are lined up to send test batches after construction, and by this time next year, CCTC could have contracts in place with some major overseas power companies if the testing goes well.
Improving coal quality has been tried before, but no one has done it with successful commercial scale. But, the companies that tried before were valued by the public markets at high prices: a few at almost $1 billion. For CCTC, the upside could be big if the technology proves itself this year or next.
Despite What You May Have Heard, Coal Is Definitely Not Dead
"Coal is dead" has been a common trope in the U.S. press, even as the new Trump administration makes major moves to revive this industry.
Nothing could be further from the truth.
Coal-fueled power plants currently power almost 40% of global electricity according to the World Coal Association. And yes, coal consumption is declining in the U.S., but most emerging geographies in the world are heavily reliant on coal for their energy, in India and other Asian countries first and foremost.
Coal's share as a percentage of the global energy mix is expected to decline, but by volume, it's expected to increase between now and 2022 according to the International Energy Association; coal-fired power generation will increase by 1.2% per year in the coming 4 to 5 years.
In fact, after the Fukushima nuclear disaster in 2011, Japan has refocussed its energy efforts back on coal power plants with plans for 36 new plants in the next ten years. In April, the government scrapped a plan to decrease coal consumption and locked in a national energy plan that would have coal provide 26% of the country's electricity in 2030!
What If Coal Could Be More Efficient?
Coal producers and coal-consuming energy companies alike have long asked themselves this question.
Coal is not all created equal. Coal from Wyoming's Powder River Basin has a burn value (measured in BTUs) of about 8,800, while Appalachian coal has a BTU of about 12,500 to 13,000. You can see that quality is why Appalachia has always been a premier coal region.
That's reflected in the price: PRB coal as of the first week of August had a spot price of $12.95 per short ton; Central Appalachian had a spot price of $72.70 according to the U.S. Energy Information Administration.
So what if PRB coal could be made more efficient to produce more energy? Coal companies could improve their own product and charge more, and energy companies could make the cheaper product they buy, like PRB, act more like coal from the Appalachian region, for instance. The price difference is about 5X! And, actually, PRB coal is much cleaner than its competitors, containing much less sulfur.
Low-quality coal accounts for about 80% of the coal produced globally, so there is a large opportunity for someone with the right technology.
Not The First To Make Better Coal, But CCTC Could Be The Last
That's the modus behind Clean Coal Technologies Inc. (CCTC). While other companies have fallen by the wayside with coal-improving technologies, CCTC has stuck with it for the last decade.
Now, they're months away from the commercialization of their technology, and the potential for some new licensing and production contracts.
CCTC's Pristine-M technology is designed to make coal more efficient. It does this in a few ways: first, by removing moisture from the coal and then by stabilizing it for transport. The result is an increased caloric value (BTUs), and a stable low-moisture coal for power generation. Removing moisture reduces shipping costs and increasing the coal ranking which improves its market price. The system was designed by the recognized engineering firm Kiewit and the University of Wyoming has taken a keen interest in the tech. The University's involvement, as one of the premier coal research institutes in the world, speaks tremendously about the technology's potential.
CCTC constructed and tested the pilot plan at a major power plant in Oklahoma, and this year they're working on reassembling the facility with recommended improvements in Wyoming. In the coming months, they expect to complete facility reassembly and begin some key testing that could lead to contracts quite quickly. Unnamed Indian and Indonesian coal companies are already committed to ship 500 -ton coal shipments of their coal in for testing, and the company actually has MOUs (memorandums of understanding) in place where with the right outcomes, some Indian companies are committed to licensing arrangements.
The next 6-12 months could be very important for the company as they finish the facility and begin testing.
There have been high-profile companies working in this area in the past, and when their technology appeared most promising, they were looked upon quite favorably by investors. Unfortunately, older technology in the late 90s and early 2000s failed to work out - the biggest issue was stabilization.
White Energy Company Limited (WEC) was a coal-cleaning company that rose to prominence around 2010, peaking at a market valuation of about $900 million. Peabody Energy Corp (BTU) even signed on to build a coal upgrading plant in the U.S., taking a stake in the public company as well. Unfortunately, their upgrading technology and plants were expensive to build, and after some setbacks and poor coal prices WEC trades for pennies.
KFx, Inc. (was KFX) was another coal upgrader whose shares traded as high as $14 and with a market capitalization for the company of nearly $1 billion. Ultimately, the company could never get their upgraded coal to stabilize for safe transport, running the risk of spontaneous combustion, and the company filed for bankruptcy in 2012.
CCTI believe their technology avoids this key problem due to a proprietary stabilization process that involves re-applying extracted compounds from earlier in the process back onto the coal. The goal is to keep the coal from re-absorbing moisture and to keep dust to a minimum. Investors should know soon enough how commercially viable this as the pilot plant gets up and running in the coming year and energy companies begin running their own test batches with the CCTC technique.
Clean Coal's process certainly could go poorly and thus investors owning this micro-cap company should be aware of the downside potential. CCTC needs to finance their business in order to complete facility construction, and though they have MOUs in place, the process could turn out like their older competitors as a commercial dud. CCTC could be worth nothing.
More efficient and cleaner fuel sources are moving to the fore, and you can see this trend playing out in the public markets. Shares in renewable chemicals and biofuels company Gevo Inc. (GEVO) rallied in the days after a recent EPA decision on their isobutanol biofuel this summer. Switching sectors, Canopy Growth Corporation (TSX:WEED.TO), is an example of another public company that has executed on a development stage business plan, hit catalysts and made investors a fortune in the process.
And with the right test results in hand, Clean Coal could join the ranks of forward-thinking energy companies. They already have MOUs in place, according to recent investor presentations, that could result in contracts quickly. Things are coming together at CCTC, and this equity could be a compelling high-reward high-risk energy company in the next 12 months.
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