Altona Energy boss Lyth on new pyrolysis agreement and plans to enter China’s waste-to-energy sector
On Monday, Altona Energy announced an agreement with GCAT Energy to use its innovative pyrolysis technology in Australia and China. We caught up with chief executive Nick Lyth to discuss how the deal’s ‘two-pronged approach’ is vital to his vision for Altona’s future.
In layman’s terms, pyrolysis is a process that uses extreme heat to chemically decompose organic materials in the absence of oxygen. Specifically, GCAT’s technology converts carbon matters into a variety of outputs including one material called syngas, which can then be used to generate things like electricity, carbon black, naphtha and diesel. Many products can fuel GCAT’s technology, but Altona will focus on just two: coal and rubber & plastic waste.
Altona first’s application of the pyrolysis licence will be to its exploration licences in Australia, which cover around 7.8bn tonnes of coal. The firm has long tried to extract value from this resource but has so far struggled to find success. However, when Lyth became CEO last year, he decided the best way forward would be to identify some complementary technology. After looking at several potential directions, he told us he settled for pyrolysis because it provides another possible use for the coal contained in its reserves:
‘Using this licence, you can dig up the coal and pyrolyse it into diesel or gas and, in turn, electricity through the use of turbines. This is very interesting, because the South Australian government, where we are based, has a significant shortfall in electricity. If you can dig this coal up and convert it at location, then it provides an additional, cheaper option than exporting it to places like China and Japan, as is standard practice.’
He believes this will make the exploration licences more attractive to potential buyers and is now looking at how to best market the new package:
‘We are not a coal miner, we are a coal explorer and developer, so our strategy has always been to bring our coal deposits to a point where we can sell them to a third party. This licence has the potential to really help with that. We will now assess our coal strategy as some parts of our coal assets will be more attractive than others because they have different characteristics that make them differently suited to pyrolysis. We will then decide how to market those assets around the world and update investors when we can.’
The second planned use for the pyrolysis licence takes Altona into an entirely new area: the waste-to-energy sector. Specifically, Lyth believes that there is an opportunity for the company to use its technology to help China with its long-term waste problem.
Over 300,000 people die in China annually from toxic emissions coming out of coal-fired power plants alone, and many of its cities rank among the most polluted in the world. However, the country is taking substantial steps to combat this, notably banning the import of foreign waste earlier this year- previously a massive industry. After talking to Altona’s shareholders and directors, Lyth decided to take pyrolysis to the market:
‘China is interesting for us because we have some major shareholders, some of whom are already directors of Altona, who are excited to work with us and develop the opportunity in China. This is not associated with coal; it is associated with all the waste problems in the country, particularly those associated with plastic and tyres. We think there is a real opportunity here to use high-quality pyrolysis technology in mainland China to help solve their plastic and waste problem. We are in the business of making money, but we think there is a huge environmental opportunity here for Altona to make a difference.’
The opportunities don’t stop here either. Going forward, now that China has closed its door to trash, more countries are likely to begin facing severe waste problems. Indeed, the University of Georgia estimates that by 2030, a 111m metric tons of used plastic will now need to be buried or recycled somewhere else. Could pyrolysis be the answer? Lyth believes so.
In the meantime, he will now travel to China to start work on expanding Altona’s footprint beyond Australian coal alone: ‘The economics look very good to us. This is an area we are keen to develop and move into, not only to improve our position on our Australian coal deposits but also to enter the waste-to-energy sector. While the price of coal is great at the moment, it makes sense for us to be diversified away from one single mineral.’
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The author does not hold shares but was remunerated to write the article