Siam Cement Plc (SCC) is banking on new technology to produce coal water as a cheap replacement for bunker oil that would be sold to industrial plants.

The company has invested Bt50 million creating its production plant which will use a new process to turn coal into coal water, a liquid fuel that is 50-per-cent cheaper than bunker oil.

The company expects to begin commercial operations at the plant within a year, and the company aims to start by supplying coal water to its own industrial plants where boilers are currently fuelled by bunker oil.

"Coal is cheaper than bunker oil, the price of which has escalated in line with crude oil prices," said Kan Trakulhoon, SCC's president. "SCC is now a major coal importer, importing around one million tonnes a year. Around 60 per cent of that goes to our own plants and the rest goes to industrial plants in general."

 Yesterday, its subsidiary, SCT Co Ltd, and the Alternative Energy Development and Efficiency Department signed a memorandum of understanding to jointly research and develop a coal-water mixture (CWM).

Under the project, 70 per cent crushed coal is mixed with 30 per cent water. An additive turns the mixture into a sludge that can replace bunker oil, with which industrial plants fuel their boilers.

Roughly, it is estimated the fuel will reduce energy costs by 30 per cent, when compared to the use of bunker oil. In 2005, Thailand consumed 6 billion litres of bunker oil, worth Bt80 billion.

"If the project is successful, we will distribute the fuel to industrial plants so they can reduce their production costs," Kan said.

Kalin Sarasin, managing director of SCT, said he hopes the CWM project will reduce crude oil imports. "As an international trading company that deals with energy imports, we have decided to focus on studying CWM in order to add value to coal."

The CWM plant will be located in Ayutthaya, and will have the capacity to produce 20,000 litres during the trial phase. The company plans to use the CWM at its paper mills within six months to a year.

"Then, if this project is commercially viable, it could become a new business for the company. We aim to be a major supplier of the fuel to industrial plants," Kalin said.

 Siriporn Sailasuta, director-general of the Alternative Energy Development and Efficiency Department, said that CWM technology had been used commercially in several countries, including the US, China, Japan, Italy and Russia. She said cooperation with SCC should lead to the commercialisation of the technology in Thailand.

 At present, there are 4,000 industrial plants with boilers that could be fuelled by CWM instead of bunker oil.

"As the fuel is 50-per-cent cheaper than bunker oil, businesses' production costs could be reduced," she said.

 She noted that since the price of oil has skyrocketed, alternative fuels have received increasing interest. At present, alternative fuels account for 3 per cent of total energy consumption, compared with 0.5 per cent in 2003. That's expected to climb to 8 per cent by 2011.

Meanwhile, Kan, speaking from the sidelines of the MoU-signing ceremony, said SCC in October would issue a final batch of bonds worth Bt5 billion for this year. He added the interest rate would be considered this month.

"The market condition is still advantageous and the amount is tiny compared to previous batches. There is still huge demand considering the selling out of bonds and requests from existing bondholders," he said.

 SCC also expects to issue bonds worth Bt16 billion next year.

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