$1bn at risk if state does not release coal
Mathew Murphy
May 23, 2009
AT LEAST a billion dollars of investment and thousands of jobs could be lost if the Victorian Government continues to prolong or rejects the release of coal for a Latrobe Valley project using an Australian-devised clean-coal technology.
Japan's ITOCHU Corporation yesterday became the latest cornerstone partner for clean-coal company Exergen's Continuous Hydrothermal De-watering technology, a patented Australian process that removes contaminants and moisture from brown coal and transforms it into export-quality thermal coal. The process reduces greenhouse gas emissions by 40 per cent.
ITOCHU's investment of up to $20 million establishes it as the fourth partner in the project alongside India's largest private power utility, Tata Power, Australia's Thiess and engineering services company Sedgman.
More than $1 billion of investment has already been committed as Exergen seeks a fifth and final cornerstone partner to help deliver 12 million tonnes a year of clean coal from the Latrobe Valley for export over the project's 40-year life.
But Exergen chief executive Jack Hamilton told BusinessDay the project could disappear offshore unless the Victorian Government provided a supply of up to 2 billion tonnes of coal.
"We are looking at locations inside Victoria but also outside the state," Dr Hamilton said. "It suits me personally to bring it to Victoria … We need the coal resource to underpin it and they are sitting on 19 billion tonnes of unallocated coal. It is a project that also requires no infrastructure investment from the Government."
India's Tata is set to double its coal imports from 10 million tonnes as it builds two power stations. It has signed an offtake agreement with Exergen for 8 million tonnes from 2014 onwards but has been making contingency plans in case Exergen is unable to supply the coal.
"We hope to have the project up and running by 2014 to meet that demand but ideally we will have to have sign off on the coal supply by (the end of the year)," Dr Hamilton said. "Does it all fall off a cliff at the end of the year? Well, Tata has three or four other companies it can go to if our project doesn't get up, so we will continue to wait and see."
Federal Resources Minister Martin Ferguson hailed the technology's potential to create "thousands of jobs" and "a brand new industry" in Victoria when he visited Exergen's successful pilot plant at Beaconsfield in Tasmania last year.
"This technology has significant potential for Victoria in particular," he said. "It could deliver emissions reductions which have been out of reach until now. The Exergen technology also holds the promise of Victoria joining the ranks of Australia's coal-exporting states."
Victorian Resources Minister Peter Batchelor has so far refused to give the green light for the project despite more than eight months of discussions, saying the Government is still talking to Exergen about the coal supply.
"The Government is taking action to encourage investment in the Latrobe Valley and through various initiatives has stimulated domestic and international interest in the sustainable development of our coal resource," he said.
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