Cleantech leader accelerates US production plans in bid to boost margins

Tue 28 Mar 23, 3:03pm (AEST)
Carbon pellets
Source: Carbon Pellets

Key Points

  • Carbonxt Group announced US$500,000 prepayment to expedite development of carbon activation plant project with Kentucky Carbon Processing LLC.
  • New plant will boost production capacity and gross margins for the sale of activated carbon products.
  • Activated carbon products play a critical role in air and water purification processes.

US-focused cleantech leader Carbonxt Group (ASX: CG1) announced a milestone in its carbon activation plant joint venture with Kentucky Carbon Processing LLC today. Carbonxt has advanced the first payment for the joint venture of US$500,000 to expedite plant construction. The Kentucky Plant is anticipated to significantly increase Carbonxt’s production capacity and gross margins for the sale of activated carbon.

Activated carbon is critical, unlike its almond counterpart

Carbonxt is known for its activated carbon products which are a critical component in air and water purification processes.

Carbonxt offers high quality powdered activated carbon for purification related to water used in food and beverages and potable water. It also offers activated carbon pellets that act as storage for gas and organic toxins.

Carbonxt generates approximately 31% of its revenue from powdered activated carbon and 69% of its revenue from the activated carbon pellets. These accounted for revenue of $8.9m in 1H23 - an extraordinary number for a firm with a market capitalisation of $16.5m as of 28 March 2023.

These numbers were in fact a decrease on the previous year due to shipping costs for its products and maintenance upgrades at two production facilities.

The significance of the Kentucky plant

Carbonxt initially announced its planned joint venture with US firm Kentucky Carbon Processing LLC in late 2022.

The venture will see development of a new activated carbon plant in eastern Kentucky, which is anticipated to increase Carbonxt’s production capacity to more than 25,000 tonnes from approximately 16,000 tonnes. It is also expected to have materially lower costs for pellet production, which will support an increase in margin growth for Carbonxt.

The joint venture is yet to be finalised but the US$500,000 payment will represent the first payment contribution for the project from Carbonxt. It will be used to fund specific items required for construction and development that have a longer lead time for procurement.

With significant market share in the US already, the new plant will allow Carbonxt to further consolidate its position in the market.

Carbonxt Managing Director Warren Murphy said: “With negotiations now moving into the advanced stages prior to the commencement of construction, we look forward to providing more updates on the Kentucky plant in the weeks and months ahead, as the Company executes on its strategy to build a major presence in the US market for activated carbon products.”

Written By

Sara Allen

Content Editor

Sara is a Content Editor at Livewire Markets and Market Index. She is a passionate writer and reader with more than a decade of experience specific to finance and investments. Sara's background has included working at ETF Securities, BT Financial Group and Macquarie Group. She also holds a degree in psychology which drives a continued fascination with how human behaviour drives and is driven by investments and market activity.

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