Xstrata, J-Power Start Work on World-First Low-Emissions Plant

By Angela Macdonald-Smith

Nov. 14 (Bloomberg) -- Xstrata Plc and Japan's Electric Power Development Co. started building a A$206 million ($137 million) project in Australia that will be the first in the world to use a low-emissions coal-fired generating technology.

Schlumberger Ltd., Mitsui & Co. and IHI Corp. are also in the group funding the venture in Queensland state, the Callide Oxyfuel Project said today in a statement. The 30-megawatt plant is due to start operating in 2011.

Australia, which plans to introduce emissions trading in 2010 to tackle global warming, depends on coal for more than 80 percent of its power supplies. The federal and state governments are contributing A$85 million to the Callide project. The Japanese government and the Australian Coal Association are also providing money for the plant that may cut typical carbon dioxide emissions from coal-fired generation by about 90 percent.

``This project will lay the foundation for the widespread deployment of low-emission coal technology so essential for Australian power generation and for the millions of people across the world relying on Australian coal,'' Australian Resources and Energy Minister Martin Ferguson said today in a separate e-mailed statement.

The venture's oxyfuel technology involves burning coal in a mix of oxygen and re-circulated waste gases, instead of air, resulting in higher concentrations of carbon dioxide that can be more easily captured from the exhaust gases. The carbon waste is then liquefied and buried underground. The technology may cut carbon dioxide emissions from coal-fired generators by about 90 percent, the venture said.

The technology can be fitted at existing coal-fired generators rather than building a new low-emissions plant from scratch.

Electric Power Development, known as J-Power, is Japan's largest user of coal. The Queensland government's interest in the project is held through state-owned CS Energy. Australia is the world's biggest coal exporter.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net