Vitol and Peabody Energy partner with Arq to turn coal into oil products

Entech group Arq has signed landmark deals with both Vitol and Peabody to advance its novel technology and has raised over $50 million of new equity at a valuation of over a half-billion dollars (US)

For almost 100 years, the energy industry has struggled to find a cost-effective way of upgrading coal into oil. Arq Technology™ represents a major breakthrough in this field, achieved by inventing a low-cost mechanical process for treating coal as a micro-particle system.

The resulting product, Arq Fuel™, is a new energy source which is ideal for blending directly into oil products without the need for expensive liquefaction. Arq has partnered with Vitol to distribute Arq Fuel™ globally. Vitol is the world’s largest independent oil trader, trading over 7 million barrels of crude oil and products a day. Vitol will blend Arq Fuel™ into fuel oil and crude oil.  Vitol will work to position Arq Fuel™ as a low-cost blending component with specific customers.

These are initially envisaged to include consumers of fuel oil and, subject to ongoing testing, oil refineries. Arq has also partnered with Peabody, the leading global pure-play coal company and a member of the Fortune 500, serving power and steel customers in more than 25 countries on six continents.

The company offers significant scale, high-quality assets, and diversity in geography and products. Together, Arq and Peabody will work to identify Peabody mine sites where Arq technology can be deployed. Arq’s technology upgrades discarded coal fines and it has the potential to substantially reduce the environmental footprint of mine sites.

This approach aligns with Peabody’s commitment to sustainable mining practices. At the same time as entering into these landmark transactions with market-leading energy companies, Arq has raised over $50 million of new equity at a valuation of over a half-billion dollars (US). This includes an initial investment of $10 million from each of Vitol and Peabody; the agreements envisage Vitol and Peabody investing further in Arq over the next 3 years. Arq’s first plant in Corbin, Kentucky, is nearing completion. Arq Fuel™ will be available in early 2019.

Julian McIntyre, Founder and CEO of Arq, said: Our goal at Arq is to produce the lowest cost hydrocarbon products on the planet. We can only do this by building a coalition of industry partners, who share our perspective that technology will be the catalyst in unlocking value in a changing energy landscape. We are therefore delighted to partner with Vitol and Peabody. They are each leaders in their respective fields and bring established market positions, together with an entrepreneurial and innovative approach. These partnerships are a validation of our products and technology and a major milestone towards realising our ambition. Mike

Muller of Vitol, said: Arq fuels will be pure hydrocarbons – combining them with fuel or potentially with crude provides the opportunity for refiners and fuel customers alike to diversify into a new and cost-effective source of supply, whilst the production of Arq fuels also has a beneficial environmental impact. We are pleased to be able to exclusively offer our customers the option of accessing an innovative new fuel component which has the potential to materially improve their competitiveness. 

Charles Meintjes, Executive Vice President – Corporate Services and Chief Commercial Officer of Peabody, said: We believe our partnership with Arq represents a rare opportunity to add value to our product, reduce our environmental footprint and expand the market for our product at the same time. While the process is at early stages, we look forward to next steps to prove out the operations and assess our sites for the applicability of this exciting technology.  

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