Carbonxt wins 8 year contract extension sending activated carbon pellets to US power plant until 2030

Carbonxt (ASX:CG1) shares are flat in the second hour of trade, even as the company posts notice of an 8 year contract extension with the largest customer of its Activated Carbon (AC) pellet product, the US-based Wisconsin Public Service (WPS.) 

WPS owns the Weston Power Plant in Wisconsin, near an area called Wausau. 

Of foremost interest is that Carbonxt has locked in a premium price some 20% higher than the current price it offers for AC pellets, as WPS clearly prioritises its relationship with Carbonxt. 

Since 2016, Carbonxt has supplied WPS with some 12,000 tonnes of its AC pellets from a manufacturing facility in Minnesota. It has worked closely with the utility operator on R&D initiatives surrounding the products, and Carbonxt continues to act in a consultancy capacity for WPS regarding emissions. 

What are AC Pellets? 

AC pellets, in layman’s terms, are used as filtration in power plants to remove mercury from emissions that are ultimately vented into the atmosphere. 

WPS’ Weston Power Plant is a coal-fired power plant and the fifth largest power plant in the state of Wisconsin. It boasts a capacity of some 1,076MW. Mercury emissions associated with coal firing are well known to the industry (and regulators) alike. 

The Weston Power Plant is held 70% by WPS and 30% by US-based Dairyland Power Cooperative.

Worth noting is that the world is burning a lot more coal in 2022 than it was in the pre-covid era. The clean tech product is also commonly used in gas-based industrial refining, leaving Carbonxt open as a potential supplier to a diverse commercial customer base. 

Higher margin revenue locked in 

“This long-term contract extension marks a major step forward,” Carbonxt MD Warren Murphy said, “it locks in higher margin revenue for the next eight years.” 

“It also sets the company up with a strong platform for additional sales growth in the US market…we are delighted to continue our partnership with WPS to build scalable solutions that comply with industrial emission regulations.” 

“With the extension of our existing contract through to 2030, we will continue to support WPS and its long-term emissions reduction goals.” 

Carbonxt's three month charts show the price flat today, even as the company locks in 8 years of higher-value sales. Are investors overlooking Carbonxt?

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Carbonxt was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.