Australia’s Linc Energy has announced that it is teaming up with South African coal miner Exxaro to develop commercial underground coal gasification (UCG) projects in Africa
Linc Energy has signed agreements for Exxaro to be granted a licence to use the former’s UCG intellectual property in the sub-Saharan Africa region. The deals include an intellectual property licence agreement, services agreement and a master agreement.
Under the arrangement, Exxaro will pay a licence fee of US$19.3mn for the intellectual property deal and a further US6.7mn upon the initial UCG project passing agreed performance tests.
UCG is the process by which underground in-situ coal combustion produces a synthesis gas feedstock that is similar to natural gas in terms of quality, but is richer in hydrogen and carbon monoxide. The technology is regarded as a safer and greener alternative to coal mining or natural gas processing as it is said to exclude cleaning and preparation circuits and ore heaps, reduce methane emissions and minimise noise and visual impacts on the surface environment.
Linc Energy will also be entitled to ongoing royalties for the synthesis gas produced and sold.
The company will hold a minimum 15 per cent interest in the initial Exxaro UCG project with an option to increase its holding up to 49 per cent in all such projects that Exxaro develops.
Peter Bond, Linc Energy’s chief executive, said, “This is a substantial strategic move by Linc Energy to add Africa to its global portfolio to roll out UCG as an alternative and complementary energy solution.
“These developments will bring efficient and reliable energy supply which is an essential part of the economic uplift of the local and regional communities.”
The agreements, however, are conditional upon approval by the South African Reserve Bank for the payment of licence fees and royalties for the intellectual property.