Algae.Tec wins vote of confidence from Indian pilot partner

Australian algae fuel developer Algae.Tec has received a significant vote of investor confidence from one of India’s industrial giants, Reliance Group, which agreed on Tuesday to purchase nearly $30 million worth of shares in Algae.Tec as part of a funding deal struck between the two companies in January.

Algae.Tec announced today that Reliance Group confirmed the conversion of 1,833,740 options at an exercise price of 16.36 cents per share – twice the market price – after “positive progress” on a joint algae plant project. Reliance hold a second tranche of 28,728,607 options following this conversion.

The deal between Reliance Industrial Investments and Holdings Limited (RIIHL) – a subsidiary of India’s largest privately owned company – and Algae.Tec was for Reliance to fund construction of a small pilot plant that would use the Australian company’s technology to capture CO2 emissions and turn them into algae for use as biofuels. 1359040354-331

As part of the deal, Reliance agreed to make an initial investment of $1.5 million and a further investment of $1.2 million.

The pilot plant is designed to calibrate the technology for local settings and is considered a fore-runner of a larger demonstration plant, and possibly commercial plants elsewhere in India. Reliance has exclusivity over the technology in the India market.

Algae.Tec says the engineering of the plant is progressing well, with fabrication of the module and other critical equipment underway and construction scheduled to begin within the next few months.

As previously reported, the location of the pilot plant has not yet been revealed, but it is thought to be in one of the large petroleum refineries in the massive Jamnagar complex in the state of Gujarat.

Algae.Tec managing director Peter Hatfull said in January that his company’s technology had the potential to make a significant impact on India’s energy and environmental requirements.

“This is a major step for us,” Hatfull said. “India is a perfect market place for our technology It is an absolutely gigantic market,” he said, citing the huge reliance on coal-fired generation and the demand for clean biofuels.

Algae.Tec also revealed in late 2013 it would focus on the “nutraceuticals” market – estimated to be worth $205 billion globally by 2017 – as a means to establish a strong revenue base.

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