Eco Investor Update
A Weekly News Update for Environmental Investors
2011 - No 58
It also looks at the challenges facing AGL and the energy industry, including climate change and carbon risk, and the steps it is taking to grow the long-term value of the business.
An interesting feature is a good list of AGL's key assets for wind, hydro, gas and thermal energy, and discussion of the economic, environmental and community impact of these.
On the issue of coal seam gas it says "AGL is demonstrating the ability for coal seam gas exploration to coexist with agriculture in one of Australia's premier wine making regions through its purchase and ongoing operation of the Spring Mountain vineyard at Broke. During FY2011, the first AGL Spring Mountain vintage was produced. AGL is also demonstrating the ability for coal seam gas to co-exist with multiple land uses at AGL's Windermere property at Bulga, where during FY2011 cattle were being fattened and lucerne baled."
AGL is on the global Dow Jones Sustainability World Index (DJSI World), the only Australian company among the 13 companies worldwide that make up the electric utilities section of the DJSI World, and on the Dow Jones Sustainability Asia Pacific Index (DJSI Asia Pacific).
Its 2010 Sustainability Report won Best Sustainability Report, Best Sustainability Report in the ASX 50 and Best Sustainability Report in the Energy Sector at the ACCA Australia 2011 Sustainability Reporting Awards.
Last week, AGL was included on the Carbon Disclosure Project's Carbon Disclosure Leadership Index (CDLI) for the ASX 200/ NZX 50, and is one of six Australian listed companies on the CDP Carbon Performance Leadership Index. (ASX: AGK)
DUET's chief financial officer, Jason Conroy, said "The recent refinancing at Multinet Gas confirms the banking community's continued strong support for regulated energy utilities in Australia."
Sumitomo Mitsui Trust Holdings has ceased to be a substantial shareholder in DUET. (ASX: DUE)
Sims Metal Management
Completion of the sale is subject to the approval of the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB), and should occur in early 2012.
Nyrstar and SimsMM will retain ARA's secondary lead producing facility in Melbourne, which will continue as a 50/50 joint venture.
ARA specializes in the recovery of renewable resources. Its total lead production in 2010 was 37,900 tonnes - Sydney 20,700 tonnes and Melbourne 17,200 tonnes.
Renewed Metals Technologies (RMT) is a private company that owns and operates a secondary lead producing facility in Wagga Wagga in NSW.
Chairman Paul Varello has acquired 8,300 American Depositary Shares for US$110,722. (ASX: SGM)
Energy World Corporation
The project is the development and operation of a 350 kilometre gas pipeline to supply gas from the Bowen and Surat Basins in Queensland to Abbot Point port; and an LNG plant and export terminal at Abbott Point port.
The LNG plant is expected to have an initial capacity of 2 million tonnes per annum (MTPA) based on EWC's modular liquefication units of 500,000 MTPA. This may be increased later.
A second phase will be the construction of an additional 550 kilometre gas pipeline linking the Gilmore gas field and the Eromanga gas field to the pipeline from Bowen Basin to the Abbot Point LNG facility.
The company recently completed a pipeline construction survey for a pipeline from Abbot Point to Eromanga. It is also finalizing the contract for the rights to acquire the land at Abbot Point port to build the LNG facility.
It is envisaged that total capital expenditure to complete the project will be in the order of US$1.5 billion, which will come from both debt and equity.
EWC will hold a 70 per cent interest in the project and act as developer and project leader. Orchid Fund Pte Limited and Energy World International have each agreed to acquire a 15 per cent interest in the project, valuing it at this stage at US$100 million.
The proceeds will be paid into a newly formed company that will hold the project. 50 per cent of the commitment will be payable on close of the transaction, the remainder on completion of the Initial Development and Final Investment Decision.
The capital raised from this transaction will partially fund the initial project investments including the feasibility study, land acquisition and costs of forming the new company to develop the project.
Executive director Brian Allen said "Combining EWC's strengths and competencies in modular LNG with the financial strength of the Richard Chandler Corporation and the direct commitment from Energy World International, we believe we have formed a group of shareholders who can develop the Abbot Point project. The transaction values the Project at US$100 million, which represents a very substantial return on the time and money invested by EWC to date."
Mr Elliott said "This is an exciting project that meets the goals of EWC and EWI of bringing clean and affordable fuel sources to Asia and providing the infrastructure needed to achieve this. Over the past few years we have worked to put in place the foundations of several large scale projects. We are now embarking on a process of development and commercialization."
The transaction is subject to due diligence and EWC shareholders approval. (ASX: EWC)
The Transpacific SPS securities jumped from $56.50 to $78 in less than a week at the end of October when Transpacific Industries announced its entitlement offer and $1.525 billion re-financing package to improve its financial position and address debt maturities for the next three years. (ASX: TPI)
Galaxy said the construction effort at Jiangsu had been accelerated and progress was better-than-expected. Under a revised project schedule announced in July, Galaxy had targeted completion by the end of the fourth quarter 2011.
Managing director Iggy Tan said "The Jiangsu construction workforce has swelled to around 900 during day shift and up to 290 on night shift, which has been critical to the final stages of project completion. Costs continue to track in line with our previously stated budget target."
Cold commissioning will occur for at least two months after the project is mechanically completed. "The Company is processing applications for final production approvals and licenses with relevant government departments and is targeting first production during first quarter of 2012," said Mr Tan.
The Vanguard Precious Metals and Mining Fund has become a substantial shareholder with 5.2 per cent. 5.6 million of its 17 million shares were acquired in the week leading up to the announcement.
M&G Investment Funds have increased their holding from 9.1 per cent to 10.1 per cent. (ASX: GXY)
However, concerns about whether government will continue to subsidize solar energy are causing consumers to be wary about installing solar systems. Scare campaigns by energy companies have also put consumers off-side, it said.
Managing director, Gerry McGowan, said people are missing out on the compelling economics of solar energy. "There's two certainties about the direction of energy prices - electricity from coal fired sources can only go up in price while solar prices are coming down."
"Not only is there a huge cost saving in electricity prices when you use solar but technology is helping make solar equipment cheaper. The main ingredient in solar panels silicon - has fallen in price from around $450/kg in 2008 to just above $25/kg today and panels are getting more powerful every day.
"Ongoing changes to government policy have blinded people to realising how cheap solar energy is and so they're missing out on protecting themselves from inevitable electricity price rises.
There are also many safeguards and audits around solar installations and people just need to make sure they've got a qualified installer. Consumers can be confident that fly-by-night operators cannot survive in the market, said Mr McGowan.
Regarding pricing, average energy bills in NSW now show a cost of between 20 and 30 cents a kilowatt hour, reaching 43 cents at peak, while solar energy costs between 5 and 7 cents a kilowatt hour to produce.
Pricing of electricity in NSW is governed by the Independent Pricing and Regulatory Tribunal which in July approved a 17.6 per cent lift in prices for 2011, meaning the differential with solar is set to widen further.
The cost of installing a solar system ranges from $2,000 to $12,000, giving payback periods of between four and eight years at projected electricity prices. (ASX: CBD)
Clean TeQ Holdings
The projects use Clean TeQ's biological and activated carbon technologies to capture and remove air pollutants.
In the past 12 months the company has restructured its sales team this is now delivering results, it said.
"Queensland and the Northern Territory are proving to be important geographical markets for us and we see that they will continue to grow in the future," said chief executive officer, Peter Voigt.
"Our ability to offer complete emission control packages takes away the uncertainty and risk for the client and strengthens our position when it comes to selling these solutions. Odour and air emission control will continue to be a major focus for the company. We are encouraged by the depth of the market in this area and see our Air Divisions sales for this financial year meeting our expectations." (ASX: CLQ)
The company said the arrangements provide a working capital facility by Stemcor Trade Finance for the lesser of US$30 million or 100 per cent of eligible cash, inventory or receivables, which is determined monthly. The term of the this facility will be three years and the margin 3.75 per cent above LIBOR.
A $25 million one year facility will be provided by Stemcor Trade Finance to repay part of the debt CMA currently owes to the financiers under its existing facility with ANZ Bank and other financiers. A margin of 5.25 per cent will apply over the 90 day Bank Bill Swap Rate.
A three year facility to be provided by GE Commercial Corporation will be for the lesser of $26.2 million or 80 per cent of the orderly liquidation value of eligible Australian equipment. The facility will partially repay indebtedness under CMA's existing facility. The margin is 3.75 per cent over the 90 day Bank Bill Swap Rate.
The fourth facility is for three years and will be provided by GE's NZ affiliate. It is for the lesser of NZ$9.6 million or 80 per cent of the orderly liquidation value of eligible New Zealand equipment and if drawn is to be used to repay the company's existing indebtedness to the Bank of New Zealand. The margin is 3.75 per cent over the 90 day NZ Bank Bill Reference Rate.
Stemcor and GE are likely to be granted various forms of security over the assets of CMA.
CMA is also in the process of raising Singapore dollar-based trade finance secured against some real estate assets in Singapore.
Chairman Parag-Johannes Bhatt said "This is an important step for CMA as part of its continued recapitalization following the completion of our recently successful capital raising."
Stemcor holds just under 15 per cent of CMA shares. "By providing these debt facilities Stemcor is enhancing its commitment to the future of CMA," said Mr Bhatt. (ASX: CMV)
The deal will be funded via a share placement.
PGM has a newly upgraded processing facility at Dandenong in Victoria and plans to expand into other states. The company expects that with the recently passed Commonwealth Product Stewardship that is designed to increase e-waste recycling rates, reduce e-waste in landfill and reduce illegal exports, there will be substantial quantities of e-waste requiring recycling.
PGM has developed its own technology to recover commodities such as aluminium, copper, steel, plastics and precious metals. It also separates and upgrades the television glass fraction (CRT), which predominantly contains lead to be sent for lead recovery by lead smelters.
The acquisition should increase the combined processing capability of both HydroMet and PGM and along with downstream processing will offer an enhanced one stop solution to the growing e-waste problem, said HyrdoMet.
The senior members of PGM's management team will provide further resources and strength for HydroMet's growth.
The acquisition is subject to the approval of PGM shareholders and, as Dr Lakshman Jayaweera, chairman of HydroMet, and his son Karvan Jayaweera have interests in and are directors of PGM, approval of the transaction by HydroMet shareholders is also required. A shareholders meeting is likely next February. (ASX: HMC)
The systems will range in size depending on the building, with the largest to be installed on the Shire Council's Administration, Library and Cultural Centre.
The first systems should be installed before the end of 2011 and all the systems will be operational by the end of the first quarter 2012.
Executive chairman Dave Richardson said the contract had been secured in a very competitive tender process.
"We believe that local governments, medium sized and similar groups are the organizations that will benefit most from upgrading to solar energy systems in the near future. This is because the cost of solar energy is increasingly affordable because it is steadily becoming close to parity with traditional electricity sources, plus they are now facing new cost impacts on purchasing electricity as a result of the Federal Government's Clean Energy Bill."
Mayor of Parkes Shire, Cr Ken Keith, said "The ratepayers of Parkes Shire will receive an economic and environmental benefit from this project because the Council will incur lower electricity costs over the longterm and we will be making an appropriate reduction to CO2 emissions by generating our own electricity from the sun," said Mayor Keith.
"The Council believes that there is an expectation in our community that we will play our part in combating environmental change and managing local finances properly. This solar energy project ticks both boxes." (ASX: SOO)
Micro Cap Companies
Advanced Engine Components
This was despite the technical due diligence being completed successfully.
The CSOE remains interested in pursuing engine developments and business opportunities with ACE in China, said the company.
Since 25 August Advanced Engine Components has been in negotiation and due diligence with other parties interested in investing through equity, joint venture and/or product licensing.
"A natural gas components manufacturer in China has completed technical due diligence and advised of their interest in investing," said the company. "They have arranged two parties to conduct commercial due diligence with the intent of one of those parties funding the transaction.
"Representatives of a North American company will conduct initial due diligence and commence commercial discussions with ACE later this month."
The company is hopeful these discussions will be .successful. (ASX: ACE)
Gianmario Capelli, Ian Campbell and Shaun Scott each directly and indirectly acquired 2 million shares for $100,000, while Mr Rudas directly and indirectly disposed of 6 million shares for $300,000. (ASX: ANQ)
Clean Seas Tuna
Terracon's reports will support the Solar Tower's front end engineering and design (FEED). The preliminary Geotechnical Engineering Report will provide the basis for a further Geotechnical Engineering study planned for first quarter 2012 and the Final Geotechnical Engineering Report for final design and construction. (ASX: ENV)
Green Rock Energy
"Given the substantial investment in power hungry mineral projects in the area we are confident of being able to attract a suitable partner," said Green Rock chairman, Jeff Schneider.
"Green Rock is also actively engaged in discussions with both State and Federal Governments on development grant funding to assist with the funding of the concept demonstration phase of the Mid West project. The company expects to make progress in this regard in coming months."
The planning is for first well by mid 2013. (ASX: GRK)
Advance Publicity Pty Ltd has lifted its stake from 14.5 to 15.5 per cent. (ASX: GER)
"We are committed to working co-operatively with our landowners," he told the annual general meeting. "We have always worked closely with our landowners and have land access agreements in place with over 250 landowners. All of our land access agreements are voluntarily entered into and we have never had a legal dispute with any landowner.
"Our landowners benefit from an additional source of stable income which is not dependent on weather conditions, exchange rates or commodity prices. Gas wells take up a very small land area and our experience has been that we are able to site all of our wells in locations acceptable to landowners."
Metgasco is also committed to protecting the integrity of aquifers. The drilling of wells through aquifers is not new and not unique to the coal seam gas industry. "Around the world, millions of water bores and mineral and gas wells have been drilled safely through aquifers," he said.
"The operating practices we employ are based on global industry standards which have been developed through decades of industry experience in drilling wells. These standards require the installation of layers of steel casing cemented into place to isolate the well from the water."
Metgasco is also committed to building an environmentally sustainable business.
Environmental management practices and environmental risk management strategies are at the forefront of our business," he said. "Day to day environmental management practices include: noise suppression strategies, weed management strategies, and water management strategies.
"As far as water production is concerned, Metgasco's wells produce very little water, typically around 70 barrels of water per day. We consider the low water production from our wells to be a major advantage."
The company is also committed to complying with all Government regulations and has never had a reportable environmental incident in its history of operations. (ASX: MEL)
Southern Crown Resources
On 4 October 2011 Southern Crown reported that it had suspended planned exploration drilling on its Nkombwa Project as the Nkombwa Hill area had been improperly excised to a third party.
On 20 October the Minister of Mines announced that the Ministry had "suspended the issuance of new applications, renewal and transfer of mining and non-mining rights" in order to "root out potential corruption and clean up' the [licensing] process".
Southern Crown said that based on information gathered at subsequent meetings with representatives of the Ministry of Mines, including the Minister and Deputy Minister, the company is confident that the improper excision of an area within the Nkombwa Hill tenement will be resolved in its favour.
"As a consequence, Southern Crown has resolved to undertake further low-cost surface exploration sampling (including trench and sawed-channel sampling) over its priority rear earth element targets at Nkombwa Hill." (ASX: SWR)
The mobile' manufacturing follows a 12-month research program by Style and Flinders University's Molecular Technologies Research Centre in Adelaide, which was partly funded by the Federal Government.
The result is the development of a transportable strand woven factory' that can be installed to existing wood finishing factories anywhere in the world to manufacture strand woven products using locally available soft wood species.
Style's chief executive, Peter Torreele, said the exportable and economically viable manufacturing cell can produce strand woven products outside of China but with a similar cost base to China due to advanced automation.
"The model has been designed to be an add-on module' to existing wood flooring finishing factories and we are in discussions with wood flooring manufacturers to form strategic partnerships for licensing of this patented technology, thereby creating a new revenue stream for the company," he said.
Until now, strand woven products have only been manufactured in China because the existing manufacturing process is extremely labour intensive and has not been able to be replicated outside China due to raw material sourcing and manufacturing cost issues.
Style's highly automated international block factory will use locally available wood species as input material, which will bring to market an entirely new range of strand woven wood products, based on domestic wood species such as poplar, oak and hickory.
Melbourne-based Style is a world leader in green' strand woven technology, and in 2004 was the first company in the world to introduce strand woven flooring products.
Its original strand woven technology uses Chinese Moso Bamboo as a low value and fast growing green' input material and transforms it into a solid floor that matches the strength and durability of 150 year old exotic hardwoods, saving tropical forests and native hardwood plantations.
Style says this latest technology will allow the company to increase its global market share of the strand woven flooring market. The Strand Woven segment has been consistently expanding its share, mainly at the expense of tropical exotics, and is gaining main-stream appeal as the green alternative to exotic hardwoods'.
This expansion will grow even further as the cost of exotic hardwood continues to increase due to scarcity of resources and restrictions on logging and deforestation, it says. Much of the growth will be in the commercial building sector - offices, retail outlets, and industrial and government facilities.
Style is headquartered in Melbourne, has its manufacturing base in the Zhejiang province in China, and has sales offices in the US, Europe, China, Australia and South Africa.
Style says it was first to develop and launch Strand Woven bamboo flooring (2004), first to develop Uniclic Floating Floor installation on SW Bamboo (2006), first to develop stains on SW Bamboo, called StyleGuard' (2010), first to develop and launch the newly patented Strand Woven Eucalyptus flooring (2011), and first to develop a transportable strand woven factory (2011). (ASX: SYP)
Eco Investor Update
Search Eco Investor