Promising a window to a cleaner world, market responds to the march of a Cielo drum
A 16-1/2 year overnight success. That is Alberta’s Cielo Waste Solutions Corp. (CSE: CMC | OTCQB: CWSFF) – if you are a shareholder, you are thrilled that the market has finally taken notice! On February 23, 2021 the company announced a purchase commitment of 900,000 litres of biodiesel at CAD$1.67/litre with an option to purchase an additional 600,000 litres at the same price for six months by an unnamed buyer.
You can see how the market reacted (below is from market close, 03/01/2021)
In the press release announcing the sale, Don Allan, President and CEO of Cielo, stated, “After several years of advancing our waste to high grade renewable fuel technology, we are finally in a position to start reaping the rewards of our efforts. These revenues are expected to put Cielo into immediate positive cash flow.”
Cielo holds the exclusive license for the global rights to a proprietary technology which has a patent approved on the process in USA and in Canada. Over almost two decades, the company has invested approximately $75 million in development of the technology that is now operating 24/7 in a facility in Aldersyde (south of Calgary), where it is consuming wood waste to create biodiesel. The facility was expected to reach capacity of 1,000 litres/hour of biodiesel in February 2021, with plans already in the works to double the production capacity this year.
Cielo’s process is referred to as Thermal Catalytic Depolymerization. Waste materials are blended with used motor oil and a powdered chemical catalyst. The mixture is then heated to a temperature that breaks down the molecules and “cracks” the materials into a blend of distillate fuels. The fuels are then further processed into renewable transportation diesel, jet and marine fuel and naphtha. While it may be a bit of a stretch to say this, there could potentially be virtually no landfill material once Cielo’s system has processed the input.
The beauty of their patented process is that it can accept almost any form of industrial and household waste – including but not limited to all seven types of plastic, tires, wood waste, organic waste, railway ties and municipal solid waste.
Said a different way – anything that can be liquefied or burned can be used as a feedstock to produce a high-grade renewable diesel.
This means that the company is not tied to feedstocks derived only from costly food crops, as are other biodiesel products. That means a lower feedstock cost. And more profitability. From any feedstock.
Cielo has already begun expanding its footprint by signing multiple Memorandums of Understanding with third parties who are in negotiation with Cielo to build, at no cost to Cielo, Joint Venture (JV) Renewable Diesel Facilities in Grande Prairie, Calgary, Medicine Hat and Lethbridge, Alberta as well as in Nova Scotia. Each JV Facility is projected to cost, depending on throughput, approximately $50 million to build, commission and place on production.
Cielo will be the general contractor and operator of all the proposed facilities, which could each produce up to 4,000 litres/hour of biodiesel. After payout, Cielo would own 50.1% of the profits from the JV facilities.
What’s the market size? Looking at diesel from a national perspective, “Net sales” (as reported by Statistics Canada) of Canadian diesel for road motor vehicles is historically around 18 billion liters per year. Canadian renewable fuels regulations require fuel producers and importers to have an average renewable fuel content of at least 5% based on the volume of gasoline that they produce or import into Canada and of at least 2% based on the volume of diesel fuel and heating distillate oil that they produce or import into Canada.
Simple arithmetic – approximately 360 million litres of biodiesel required per year. One Cielo plant at 4,000 litres/hour is only 32.7 million litres per year (at 93% efficiency). There is a lot of opportunity for Cielo in the biodiesel market in Canada alone. Never mind around the world.
Lowest cost feedstock. Facilities run on green electricity. Ability to consume plastics no longer being accepted as “recycling” by anyone in the world. Cash flow positive.
It’s not a landfill company, it’s a refining company with a world-beating technology. Now you know why the share price is on a run.
Frederick Kozak is a Professional Engineer with extensive oil and gas, and international business experience and has more than 25 years involved in capital markets ... <Read more about Frederick Kozak>