Cleantech oil refiner Hydrodec (LON:HYR) has joined forces with Kobelco Eco-Solutions to establish a joint venture that will be the first to use Hydrodec’s technology in Japan.
Shares in the firm jumped by more than eight percent this lunchtime at the company released news of the deal to the market.
Hydrodec and Kobelco, Kobe Steel Group’s environmental company, have formally executed a shareholders’ agreement to establish Pacific Eco Refining Company.
The deal follows on from the establishment of a strategic alliance between the two companies in March 2010 to exploit Hydrodec’s technology – including the “re-refining” of polychlorinated biphenyl (PCB) contaminated transformer oil – in Japan and other major Asian markets. Since then the two partners have worked closely on plans for the construction and operation of the first re-refining plant in Japan – where the technology has received approval from the Ministry of Environment.
The signing of the deal means both parties can begin operations to construct the plant, conclude commercial negotiations with suppliers and customers and secure debt finance within Japan.
Hydrodec said that good progress continues to be made towards the start up of this first plant in the second half of 2012.
Pacific Eco Refining will re-refine contaminated transformer oil to produce high-grade transformer oil and also supply clean transformer oil for decontaminating electricity industry transformers before their disposal. Hydrodec said that its technology “remains unique” and patented, and it is exclusively available in Asia through the 50:50 Kobelco ECO/Hydrodec technology company: Hydrodec-Eco Japan Company.
Kobelco and Hydrodec together intend to establish PCB-contaminated transformer oil refining operations in several locations in Japan. The business will also be expanded to other Asian markets where there are also large volumes of PCB-contaminated oil that require treatment in accordance with the Stockholm Convention on Persistent Organic Pollutants.
Hydrodec has estimated that the potential processing demand for treatment of low-level PCB-contaminated transformer oil in Japan alone is in excess of one billion litres, or US$1 billion in potential revenues.
“Considerable progress has already been made by Hydrodec and Kobelco since we established the strategic alliance,” said Mark McNamara, Hydrodec’s chief executive. “With the signing of the first operating agreement, we now have the foundations on which to roll out and operate our first plant in Japan. Kobelco have been outstanding partners and we look forward to continue our work with them to deliver a proven, environmentally friendly and safe solution for the treatment of toxic industrial waste oil.”
By 13:30 today Hydrodec’s shares had risen 8.55 percent to 7.87 pence each.