Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Table of Contents
References....................................................................................................................................................47
Appendices..................................................................................................................................................48
Mantra Venture Group Executive Business Plan
This business plan informational package contains confidential and proprietary information
concerning Mantra Venture Group Ltd. (MANTRA) and its subsidiaries. This package does not
constitute an offer to sell or a solicitation of an offer to buy. It is being presented to a limited number
of individuals for informational use only. The information in this package was obtained from the
principles of MANTRA and other sources, but no assurances can be given as to the accuracy or
completeness of such information. By acceptance of this package in hard copy or electronically,
the recipient agrees not to reproduce, distribute, or circulate this package, and not to divulge or
otherwise disseminate the information contained herein to any other person without the express
written consent of MANTRA.
Startup companies are inherently risky. All statements made about the company are forward looking.
Total elimination of risk from this project is impossible. The three main categories of risk to which the
company and its project are exposed are regulatory, financial, and operational.
Corporate Profile
Mantra Venture Group Ltd. (Mantra) is a diversified Green Tech company seeking to become a
world-leader in the development of commercially viable sustainable technologies. By acquiring
the most promising technologies from universities, laboratories and companies and bringing them
through to commercialization, Mantra will create significant shareholder value through subsequent
acquisitions, spinouts and licensing fees.
Mantra was incorporated in January 2007, and began trading on the NASD OTCBB in December of
2007 under the trading symbol MVTG.OB. As of Sept 2nd, 2009, there were 30,793,122 shares issued
and outstanding, with a public float of 8,809,233. The company is also traded on the Frankfurt Stock
Exchange under the trading symbol: 5MV.
1. Executive Summary
The world is rapidly changing before our eyes. Global fossil fuel reserves are hastily dissipating,
average temperatures are increasing, and our most vital natural resource, water, continues to be
abused and polluted by inefficient and unnecessary human behavior. It is therefore no surprise
that environmental technologies or “Green Techs” are the most popular and sought-after
investments as seen by Venture Capitalists today. Despite the struggling global economy, the
sustainability industry continues to expand at an alarming rate- a trend that will only strengthen
in the years to come.
Established in January 2007, Mantra Venture Group Ltd. has set out to become a world leader
in acquiring and commercializing breakthrough green technologies that are unique, practical
and show unlimited market potential. Based in the Pacific Northwest, a hotbed of Green
Tech innovation, Mantra’s key advantage lies in its tightly knit relationships with universities,
laboratories and companies - offering Mantra first-mover access to the most promising
technologies available.
Mantra’s business model consists of an aggressive 10-step growth strategy that begins with
an environmental assessment of current and future trends, followed by the identification of a
future need and an analysis of the political environment surrounding that need. Mantra then
leverages its ever-expanding network of industry partners to locate, evaluate and acquire the
technology best suited to meet the need. Mantra transfers any associated intellectual property
to one of its strategic business units (current business units include: Mantra Energy Alternatives
Ltd., Mantra Water and Mantra Media), and then injects capital into the project to incubate and
optimize the technology in collaboration with Kemetco Research Inc. Once development is
complete, the technology is entered into the international marketplace via one of two alternate
strategies: licensing agreements with industry-leading organizations or a spinout of the entire
business unit.
Current areas of interest for Mantra include: the reduction/recycling of carbon dioxide and
alternative energy. As a result, Mantra has positioned itself to become a leader in each of these
segments through a vested interest in two core technologies: the Electroreduction of Carbon
Dioxide (ERC) and the Mixed Reactant Fuel Cell (MRFC).
Electroreduction of Carbon Dioxide (ERC): A CO2 recycling technology that converts CO2 into
highly sought after materials, such as: formic acid, formate salts, oxalic acid and methanol. There are
currently 27 Billion metric tonnes of CO2 emitted annually from fossil fuel combustion, and formic
acid, one of ERC’s key end products has a current market value of $1,440/tonne.
Mixed Reactant Fuel Cell (MRFC): An innovative fuel cell technology benefiting from a simplified
structure in an effort to greatly reduce manufacturing costs and improve durability, thus defeating
the two main barriers to entry for fuel cells today. The fuel cell industry is expected to generate more
than $18.6 Billion USD in 2013, and if significant advancements are made in the automotive sector,
this number could jump as high as $35 Billion USD.
Over the next two years, Mantra plans to aggressively develop each of the aforementioned
technologies. Mantra Energy Alternatives Ltd. will be building an on-site ERC demonstration unit
capable of converting 100 - 500 kg of CO2 per day, as well as an MRFC pre-commercial prototype.
The costs of these two projects will be $2.18 Million CDN and $0.98 Million CDN, respectively for a
total development cost of 3.16 Million.
To finance the aforementioned operations, Mantra is currently seeking a total cash injection of 5.0
Million over a two-year period. Proceeds will be used to develop the two technologies currently in
its portfolio, all associated overhead costs, and research and analysis of new technologies.
Upon completion of the development projects, Mantra will begin generating revenue in licensing
its ERC technology, and it will be ready for the development of a commercial scale MRFC prototype.
Mantra anticipates annual revenues of $63.8 Million CDN by 2017.
2. Business Strategy
2.2 Objectives
The objectives of Mantra Venture Group are:
Mantra’s aggressive 10-step growth strategy, as outlined below, will see the company create a
significant return on investment for investors by becoming a key contributor to the global effort
for environmental sustainability.
*Note: Many Green Tech projects require a massive initial investment; it would not be viable for Mantra to undertake one of these
major projects independently. Therefore, its strategy is to either i) approach the project by means of partnership or joint venture with
a larger organization or government body, or ii) search for ancillary or supporting products and technologies that will contribute
to much larger projects and which will succeed as the larger projects proceed. In this way Mantra will tap into worldwide markets,
even if it is not directly responsible for the entirety of the larger project.
**Note: Performance parameters as set in Stage 6 must be successfully achieved during the probationary portion of this stage, or
technologies are terminated (only technologies showing extraordinary revenue and commercial potential are continued after the
probationary period).
Larry Kristof
President, C.E.O.
Management
Larry Kristof
President, Chief Executive Officer
Larry Kristof has over 15 in 1974, and was a founding partner of the
years experience in business Vancouver accounting firm of Buckley Dodds
development and corporate and Associates. Mr. Buckley has over 20 years
leadership. In 2003, Mr. Kristof experience in financing public and private
co-founded Lexington Energy companies including Government grants for
- a company engaged in scientific research projects, and oil and gas
manufacturing and leasing oilfield service operations, and both conventional and private
equipment to oil and gas, and other oil field debt equity financing for public companies.
service companies. Under Mr. Kristof’s direction, Mr. Buckley also has considerable experience
Lexington introduced the first nitrogen- in setting up internal control systems for
on-demand system to Alberta oil markets. clients, and advising companies on many
The technology represented a significant dealings with both the BC Securities Exchange
advancement in the application of nitrogen Commission and the SEC.
technology, with purification capabilities of
98-99.5%. Lexington later became the first John P. Russell
manufacturer of drilling systems specifically Vice-President of Technology Evaluation
designed for oil sands exploration coring
Through the successful introduction of these Mr. Russell has over 30 years
technologies, the company transitioned from experience in the identification,
concept through to a revenue generating evaluation and marketing of
company with assets of over $7 Million during technology; he has authored
Kristof’s time with the company. . a chapter of a book on sonic
energy applications (Elsevier), several scientific
After recording corporate revenues of $2 publications, and has given conference
Million in the first two quarters of 2007, Mr. presentations on new technologies. He was
Kristof resigned from Lexington Energy to Vice-President of Technology with ARC Sonics
focus full-time on the Green Tech sector as Inc., a specialty engineering firm. He holds a
President and CEO of Mantra Venture Group Bachelor of Arts degree from the University of
Ltd.- a company in which he founded earlier British Columbia.
that year.
As Vice-President of Technology Evaluation,
Con Buckley Chair of the Science Advisory Board and a
Chief Financial Officer Director, Mr. Russell draws upon his knowledge
and experience to identify, evaluate and select
Con Buckley graduated from the the most promising technologies within
University of British Columbia those industry sectors targeted by Mantra. His
with a bachelor of Commerce innovative flair lies in finding and describing
degree specializing in finance. Mr. Buckley applications for new, promising technologies
became a member of the Institute of that are often less than transparent. He
Chartered Accountants of British Columbia contributes as a team member to the ongoing
development of business strategy.
Management
4. Business Partnerships
Mantra’s partnership with Kemetco is one of the key components in the successful execution of
its corporate business model. Mantra and Kemetco established a collaborative research facility
in Richmond, BC in 2007, and all technologies acquired by Mantra are later transferred to this
facility for expedited development. Kemetco shares a significant responsibility in the technical
development of Mantra’s projects, and the company has played a pivotal role in advancing both
ERC and BRS technologies. Kemetco will continue with such development into the foreseeable
future.
Kemetco Management
Norman Chow earned a B.A.Sc. in Metals and Materials Engineering from the University of
British Columbia, graduating top of his class. Continuing his education, he received a Masters of
Applied Science Degree and then became a Registered Professional Engineer (P. Eng.) in British
Columbia. Mr. Chow has over 10 years of technology development experience and contract
research experience. His background includes technology development, business management,
international sales, project management and manufacturing.
Mr. Chow co-invented a patented electrochemical metal cleaning process that is currently
used in approximately 50 systems spanning 12 countries. In addition, Mr. Chow has taken
two companies from concept to commercialization and has built over 20 demonstration and
commercial projects around the globe. He has been the winner of several prestigious awards
that recognize his skills in engineering and business. In 1996, his patented metal cleaning
technology won the Financial Post Gold Award for being the Top Environmental Technology
in Canada, and then in 2004 he was named the winner of the Business in Vancouver Top Forty
under 40 Award.
Joey Jung earned his Masters of Applied Science Degree from the University of British Columbia
in Chemical Engineering and subsequently became a Registered Professional Engineer (P. Eng.)
in British Columbia. He has had a successful career in electrochemical engineering and battery
research, formerly serving as Vice President and Chief Technology Officer of a publicly traded
battery development company.
Mantra Venture Group currently has three strategic business units through which it carries out
its operations:
While each business unit represents a viable business opportunity for Mantra and its
shareholders, Mantra intends to dedicate the entirety of its resources over the next two years
to the development of those technologies under the Mantra Energy Alternatives Ltd. (Mantra
Energy) unit. As a result, Mantra Energy is the main focus of this business plan - the details of
which are outlined in later sections of this report. For more information on Mantra Water and
Mantra Media, refer to Appendices A and B, respectively.
6. Financial Plan
6.1 Capital Requirement
Mantra Venture Group Ltd. is currently seeking a capital investment of $5 Million CDN over the
next two years. This investment will supplement the $2 Million CDN in anticipated revenue
generated through early licensing, cost sharing and grant programs over the same period.
Overall proceeds of $7 Million CDN will be allocated as follows:
1. The Company committed to pay 5k per month to fund a 2010 Olympic event (total was 20k) - 5k was prepaid and the remainder due
in Oct, Noc, Dec (monthly installments)
2. Consists of 6k per month for Shawn Kim, and 4k per month for Steve Norris, and 4k per month for Buckley Dodds
3. Consists of 5k Larry Kristoff, and 5.25k John Russell
4. Interest is non-cash as it is an accrual on the convertible debenture debt so it is added back below
5. Consistent with prior year, amount includes Kelly Kristof’s monthly salary, rent payments for Vancouver and Seattle offices, and other
general office expenses
6. Audit fee presumed to be paid in Q1, the $3,500 is the quarterly accounting fees
7. Per discussion with Larry Kristoff, CEO, the Company believes it can raise 3.5 million by end of Feb 2010; and 1.5 million thereafter
(assumed) when the projects proceed into the later stages
8. Contingency is estimated at 15% of total costs for the project
9. Consists of wages and salary to Kol, Michael, and Cynthia - $10,750 per month
Initial Investment: $6.8 Million CDN ($1.8 Million to date, $5 Million New Capital)
Return After 10 Years: $365 Million CDN
Average Return / year: $36.5 Million CDN
ROI / year: 536 %
7. Action Plan
The following Gantt Chart provides a 5-year projected timeline in which Mantra will carry out its
business development activities.
1. Summary
Mantra Energy Alternatives Ltd. (Mantra Energy) was incorporated in May 2007 with the mission
of actively seeking out alternatives in the energy field. Current areas of interest include carbon
recycling (converting CO2 into useful chemicals and products), alternate ways of using fuels (e.g.
fuel cell rather than combustion), and new systems or products for the more efficient use of energy.
Mantra Energy researches opportunities within the aforementioned categories, and subsequently
makes recommendations in regard to investment by Mantra Venture Group.
Mantra Energy currently has a vested interest in two technologies. The first is a proprietary carbon
recycling technology entitled Electroreduction of Carbon Dioxide (ERC). ERC converts CO2 into
valuable chemicals such as formic acid, formate salts, oxalic acid and methanol. Through ERC, Mantra
Energy looks to penetrate the multi-billion dollar carbon reduction/carbon recycling industry- an
industry desperate for a viable solution.
In September of 2009, Mantra Energy disclosed its interest in a second technology entitled the
Mixed Reactant Fuel Cell (MRFC). MRFC is a fuel cell with a new architecture that eliminates the
need for expensive and fragile compenents found within typical fuel cell technologies- making it
more durable and cost effective to manufacture. This technology stands to benefit greatly from
the further development of ERC, as it is currently undergoing development trials using formate as
the fuel (one of the key products of ERC). The global fuel cell industry is expected to generate more
than $18.6 Billion USD in 2013, and if significant advancements are made in the automotive (mobile)
sector, this number could jump as high as $35 Billion USD. (Energy Business Reports, 2008)
Over the next two years, Mantra Energy plans to expedite the development of these two technologies.
Mantra Energy will be building a pilot scale on-site demonstration unit capable of converting 100 -
500 kg of CO2 per day, as well as an MRFC pre-commercial prototype. The costs of these two projects
will be $2.18 Million CDN and $0.98 Million CDN (respectively) over the next two years, for a total
development cost of $3.16 Million CDN.
Upon completion of the two aforementioned projects, ERC will be ready for off-take licensing
agreements and full implementation into industry, and MRFC will move to the on-site demonstration
scale.
Consulting firm McKinsey & Co. figures that adding CCS to the next generation of European
power plants could lift their price by up to US$1.3 billion per project. Their thorough analysis
shows that the typical cost of a demonstration project is likely to be in the range of US$80-$120
per tonne of CO2 sequestered.
Legally, there are concerns over whether CO2 transport and long-term storage present human
or ecosystem related risks. While progress is underway in some countries, no country has yet
developed the comprehensive, detailed legal and regulatory framework that is necessary to
effectively govern the use of CCS.
In fact, no full-scale CCS project that captures and sequesters carbon dioxide from a coal-fired
power plant as of yet exists. The International Energy Agency (IEA) is hopeful that 10 full-scale
demonstration plants will be up and running globally by 2015 meaning it may be another 10 to
20 years before CCS technology is readily available.
In addition, skepticism from local populations must also be overcome. European power giant
Vattenfall AB, for example, was recently forced to halt its CCS pilot plant in Schwarze Pumpe,
Germany due to overwhelming safety concerns from the local population. (Fairley, Aug 8
2009).
As fear of climate change grips the globe, businesses and governments are desperate to find
an answer to our CO2 problem. Relying solely on CCS is an incredibly risky and in many places
unworkably expensive solution. More imaginative thinking shows us that the 27 billion metric
tonnes of CO2 per year may actually be recycled, representing a viable business opportunity.
(Oloman, 2008).
So why expensively transport and store the CO2 underground when it could be profitably
recycled post-capture?
2.2 Technology
The Electroreduction of Carbon Dioxide is
an innovative carbon recycling technology
that combines CO2 with water to produce
highly sought-after materials such as formic
acid, formate salts, oxalic acid and methanol-
valuable chemicals used in a variety of
industrial applications.
It is the goal of ERC to serve as a safe and more economical alternative to CCS. ERC will
be integrated into industrial plants whereby it will convert captured CO2 into products
suitable for re-use on-site (formic acid in steel processing, for example) or for sale in
the open market.
+
=
CO2 H2O
HCOOH (formic acid and oxygen)
ERC Plant
steel deicing
CO2 pickling runways
rubber pharma-
ceuticals
Formic Acid
HCOOH
cleaning leather
Coal plant/power plant products treatment
CO2 emitter
ERC first proved itself as a legitimate alternative to CCS in October 2008 through Mantra Energy’s
completion of the first ERC prototype. The prototype, capable of converting 1 Kg of CO2 into
formic acid per day, was revealed to the public later that month at the Sustainability 2008
conference held in Vancouver, BC.
ERC received its first grant under the National Research Council’s Industrial Research Assistance
Program (NRC - IRAP) in May 2009, and the technical staff has since been focused on increasing
the cathode life, reducing formate cross-over to retrieve formate from the catholyte solution,
and optimizing the reactor with respect to its use in processes for the electro-synthesis of
formate/formic acid. Considerable progress has been made in this effort, and in July 2009 the
ERC reactor reached new heights by increasing its current efficiency to 89.66% (up from 46.24%)
through the use of a new proprietary catalyst structure.
With political and regulatory concern for CO2 mitigation reaching an all-time high, the timing
for ERC could not be better. In June, the IEA predicted the price of carbon emissions must rise to
$180/tonne by 2030 to meet greenhouse gas reduction targets. In addition, the market price of
formic acid is also on the rise and is expected to hit $1,440/tonne by year-end. These increasing
market values, coupled with the many government grant and incentive programs for carbon
recycling and CCS, indicate a very bright future for ERC. (Sethuraman, 2009).
The ERC technology was co-invented by Professor Emeritus Colin Oloman and Hui Li at the
University of British Columbia’s Clean Energy Research Center (CERC). Mantra Energy later
acquired the 100% outright ownership of the technology from the CERC in November 2007.
The technology is currently Patent pending worldwide, under the PCT Patent Application
WO2007/041872 “Continuous co-current electrochemical reduction of carbon dioxide.” For a
copy of the pending patent, see Appendix C.
In August 2009, Mantra Energy completed a preliminary carbon balance report on its ERC
technology, entitled “Possible Reactions Related to Carbon Credits – ERC Process of Mantra
Energy.”
In completing the analysis, it was determined that one tonne of formic acid formed through ERC
effectively “sequesters” approximately 0.95 tonnes of CO2. Assuming that the formic acid is then
incorporated into compounds with a long lifetime (as is the plan for ERC), the resulting formic
acid is considered a green product. When powered by sustainable electricity, the ERC process
would then carry a net gain of +0.95 CO2 credits per tonne of formic acid formed.
Furthermore, it was noted that when the formic acid is used to substitute another fossil-based
compound, additional “replacement credits” can be obtained. For example, Mantra Energy has
previously identified formic acid as a key replacement for hydrochloric acid (HCI) in industrial
processes such as steel pickling. By substituting HCI with formic acid generated through ERC, it
was determined that Mantra Energy would generate +0.95 carbon credits for the conversion of
CO2 to formic acid, plus an additional +2.53 credits for replacing HCI from a conventional source.
Thus, a total of +3.48 CO2 credits would be generated per tonne of formic acid produced. In
benefiting from both sequestered and replacement credits, preliminary calculations showed
that ERC could generate as much as 5.98 carbon credits per tonne of reactant formed.
ERC
5.98 carbon
6
credits per tonne
5 generated
4
The negative carbon balance scenarios identified through this preliminary report are very
encouraging. Mantra Energy expects to achieve even further improvements to its carbon
balance throughout the current set of development trials with Kemetco Research Inc., and the
company will complete a formalized carbon balance study upon completion of the development
project.
For a complete copy of the preliminary carbon balance report, see Appendix D.
2.4 Market
The concentration of Carbon dioxide (CO2), earth’s most notorious greenhouse gas resulting
from human activities, has risen by more than 30% since the industrial revolution. As Illustrated
below, CO2 now accounts for 84.8% of all emissions, with electricity generation having the
greatest impact of all economic sub-sectors. (Environmental Protection Agency, 2006)
With more than 27 billion metric tonnes of CO2 emitted annually from the burning of fossil
fuels, Government organizations and regulatory bodies worldwide are placing unprecedented
pressure on industry sectors in an effort to curb these emissions.
Governments and major corporations worldwide are investing $ Billions USD in Carbon Capture
and Storage (CCS) and carbon recycling technologies in an effort to mitigate the release of CO2
from industrial processes. The European Union, for example, is investing 9 Billion Euros ($11
Billion USD) to develop up to 12 pilot projects to prove that CCS works on a commercial scale.
However, despite the amount of scrutiny and subsequent developmental support given to
industry, economical and viable solutions to resolve this age-long issue are still non-existent
(other than energy conservation). Not only is CCS still far from being economically viable, it
has raised serious environmental concern, legal and regulatory issues due to the unknown
ramifications of permanently storing CO2 underground.
Mantra Energy’s objective is to make electrochemical reduction of carbon dioxide not only
cost effective but also profitable for emitters for whom CO2 management is either mandated
or desirable. Therefore, the primary markets for ERC will be the following sources of stationary
CO2 production:
Of those industries
highlighted above, Mantra
Energy is particularly
interested in opportunities
such as integrated plants in industrial applications that produce large quantities of CO2 that can
also utilize the final products. The economical production of these high value products (formic
acid) may allow their use as environmentally friendly replacement to other chemicals currently
used in industry. ERC would then be considered as a step towards mitigating climate change as
well as an economic process.
Upon successful entry into the CO2 market, a powerful and perhaps even more profitable
market will develop for ERC’s useful by-products. Sodium Formate and Formic Acid, two of
the main products of ERC, currently have an average market value of $1,440/tonne, with more
than 620,000 tonnes of formic acid produced annually (Li, 2006). Their applications are diverse,
including feedstock preservatives, de-icing solutions, cleaning solutions and baking soda to
name a few. The market for formic acid has experienced continual growth and demand over
the past several years, mainly attributed to the following:
• European and developing country demand for formic acid as a silage
• rising raw materials, energy and logistics costs
• increase in demand as animal feed preservative
• Asian demand for formic acid in the leather, rubber, food and pharmaceutical industries
$752
Steel Pickling
Steel pickling is part of the finishing process in
the production of certain steel products in which
oxide and scale are removed from the surface of
strip steel, steel wire, and other forms of steel by
dissolution in acid. A solution of either hydrochloric
acid (HCl) or sulfuric acid is generally used to treat carbon steel products, while a combination of
hydrofluoric and nitric acids is often used for stainless steel.
As an organic acid, formic acid would be a very attractive replacement for HCI in the steel
pickling process. Less iron would be lost from the steel surface, the final surface quality would
be improved, and corrosion inhibitors and neutralizing rinse process would be eliminated.
Formic acid is both biodegradable and reusable and process water could be easily recycled.
The following diagram depicts the production and usage of formic acid in a 13,000 tpd steel
plant.
The following shows the integration of Mantra Energy’s ERC system into a steel mill making
13,000 tpd of 16 gauge rolled steel. In the manufacturing process, iron ore is converted into
steel which is poured into billets; these are later reheated and rolled into strip steel; as they are
being rolled oxides form which must be removed to provide a clean surface. The finished steel
strip goes on to make refrigerators, car panels or other steel products.
Ferrous Formate
Recycle to Blast Furnace
Approximately ¼ of the HCI produced in the U.S. is used for pickling steel (American Chemistry,
2003), consuming an estimated 5Mt/year.
Pulp Processing
The market for formic acid is growing rapidly in Asia and one of the leading applications is in
pulp and paper making. The paper industry in Asia is largely different than that of North America
in that the paper is derived less from wood pulp and more from river reeds. Subsequently, the
processes required for making paper from river reeds favor the use of formic acid. Previous
patent filings show that formic acid can be applied at concentrations between 60 and 99% by
weight. The potential market in this application is large and will likely gain more attention as the
world economy improves and profitability returns to the industry.
Fuel Cells
In fuel cells, liquid fuels are indirectly combined with oxygen to form carbon dioxide and water
while generating electricity- a process known as electro-oxidation. The complimentary nature
of ERC and electro-oxidation makes it possible to use ERC in a regenerative fuel cell cycle, where
CO2 is converted into a fuel that is consumed in a fuel cell to regenerate CO2.
Renewable Energy
ERC
CO2 Converted to Formic Acid
Formic
Carbon Acid
Dioxide
Fuel Cell
Formic Acid Converted to CO2
Energy
The development of direct formic acid fuel cells (DFAFCs) is likely to be a significant commercially
valuable use of formic acid. DFAFCs are gaining popularity over hydrogen and methanol based
fuel cells because of their ease of refueling, efficiency, and safety. DFAFCs are currently being
tested by major producers of portable electronics in phones, laptops and computers. With
continued development, there is potential for DFAFCs to challenge traditional batteries as
power sources for mobile electronic devices with large scale applications expected to follow.
Fuel Additive
Formic Acid Projected Market
In addition to the production of formic acid,
the ERC process can be adapted to produce
ammonium formate- a potential fuel additive
currently being tested in Europe and Japan. This
chemical compound shows great promise in
reducing NOx emissions when added to diesel
fuel-potentially representing yet another
secondary market for the electroreduction of
carbon dioxide.
2.4.2 Competition
There are currently no industrial practices in place that safely mitigate the expulsion of CO2 into
the atmosphere. Currently, the most commonly proposed industrial practice is the capture of
CO2 and injecting it underground for storage in a process called carbon sequestration. However,
full carbon capture and storage systems for large-scale power plants are currently far from
being cost effective. According to the European Commission, the process will still cost more
than the release of CO2 into the air in 2020 (with an estimated permit price of 41 Euro per metric
tonne). Although carbon capture and storage may show promise for enhanced oil recovery,
this is a very industrial specific application that can only be applied in specific locations. Other
potential applications, such as chemical processing or treatment by algae are in the R&D stage,
however, practical applications have not yet been proven. Given these constraints, the European
Commission expects power firms will sequester only 7 million metric tonnes of CO2 annually by
2020- representing less than 1% of the CO2 they currently generate. (Fairley, Aug 15, 2009)
• The ERC process is driven by electric energy that can be taken from an electric power grid
supplied by hydro, wind, solar, tidal or nuclear energy (all renewable).
• ERC by-products represent useful, and financially profitable sources of income (contributing
to an estimated ROI of 24%)
• ERC pilot projects can be executed on any scale, whereas sequestration can only be
performed on a very large scale (typically at
costs of over $1billion)
• ERC avoids liability concerns currently plaguing
sequestration industry
• Medium reaction rate allows for commercial ly
viable CO2 processing times
• Medium CO2 space velocity gives the ability to
treat comparatively large volumes of CO2.
• High product selectivity for formate and formic
acid (up to 90%)
• Low operating temperature (20° to 80° Celsius)
and pressure (below 1 MPa or magnitude of
pressure)
• Hydrogen is not required as a feed reactant, but
is already present in water used in the process
• Physical space requirements and subsequent
environmental foot-print are less than that of ERC Reactor
CCS and algae
• ERC is patent pending
Helpful Harmful
to achieving the objective to achieving the objective
Strengths Weaknesses
S
• Unique, patent pending technology with proven
W
the environment
prototype
Internal origin
attributes of
Opportunities Threats
• Funding for CCS and carbon recycling • Current economy harming investors’
O T
technologies on the rise willingness to fund projects
the environment
External origin
• Political concern for CO2 on the rise • CCS still seen by many as most likely solution to
attributes of
In collaboration with Kemetco Research Inc., Mantra Energy will engage in a two-stage
development process to take ERC from its current stage through to the completion of an on-
site demonstration unit capable of converting 100 - 500 kg of CO2 per day. The following is a
detailed breakdown of the steps to be undertaken.
Stage 1 – Engineering, Construction and Testing of Demo Unit (To be completed in 1st Year)
Development of front end CO2 capture system
Stage 2 – Shipping, Installation and On-Site Pilot Demonstration (To be completed in 2nd
Year)
For a breakdown of the costs associated with the above development plan, see section 2.6.1.
Within a 3 year period, Mantra Energy expects to progress from pilot scale trials to the
implementation of full scale commercial ERC reactors capable of processing 100 tonnes of CO2
per day.
Given the magnitude of the ERC project, both government and corporate partnerships will play
a pivotal role in further development of the ERC technology.
ERC received its first grant under the National Research Council’s Industrial Research Assistance
Program (NRC-IRAP) in May 2009. The objective of this first grant program was to establish the
technical basis for electro-reduction of carbon dioxide to formate via continuous electrochemical
reactor. The main milestones to be achieved were: i) to develop longevity of catalyst materials
for anode and cathode used in the electrochemical reactor, ii) to develop an in-situ catalyst
regeneration method for the cathode catalyst material, and iii) to resolve formate crossover and
prolong the lifetime of the employed membrane.
Mantra Energy successfully completed this project in September 2009, Mantra signed its second
Contribution Agreement with NRC-IRAP in support of ERC. The objective in this recent initiative
is to explore suitable materials for the cathode used in the electrochemical reactor, develop an
efficient and effective method to separate and concentrate the formate product, and develop
an efficient and effective method to convert the formate product into formic acid. Mantra will
continue to work in collaboration with Kemetco Research Inc. to see the project through to
completion.
Strategic Alliances
While significant progress has been made on ERC over the past 12 months, Mantra Energy
is currently working to overcome several key obstacles in order to fully capitalize on the
commercialization of ERC. These obstacles include:
• Development of a front-end CO2 capture system that supplies ERC with flu-gas in suitable concentrations.
• Work is now underway in collaboration with Kemetco Research Inc.
• Development of a continuous reactor, using catalyst regeneration or other method.
• Significant progress has been made on this over the past 6 months under NRC-IRAP program
• Use different catalyst material to expand market applications and end products.
• Mantra Energy is currently collaborating with several development partners in this area
• Development of a back-end concentration/purification system that prepares ERC end-products for their
intended use.
• Suitable technologies to achieve this system have been identified, and product samples are being
exchanged
While Mantra is confident that each of the above obstacles can be successfully overcome,
Mantra does not currently have the engineering and financial capabilities to complete these
tasks independently. Therefore, Mantra will form strategic alliances with industry leading
corporations to supplement Mantra’s engineering and financing capacity. Alliances may be
structured in a variety of ways, including:
• collaborative partnerships
• off-take agreements
• licensing agreements
• percentage ownership (equity)
• Board of Directors, Advisors to the Board
Over the course of the 4 months that follow, Mantra and 3M will undertake a sequence of trials
to evaluate a series of 3M parts, especially membrane and catalyst structures, for practicality
and economic feasibility. The objective of the project is to accelerate the development of the
commercial ERC reactor and reduce the overall operating cost of the industry-ready package.
Mantra plans to include those materials from 3M that are found to contribute to the complete
commercial system. Funding for the project will be done by way of cost sharing, with each party
contributing 50% of total labour and material costs.
In addition, Mantra Energy held meetings in mid November with 3M and a host of prospective
development partners, and the company anticipates several other relationships will be in place
by year-end 2009.
Market Penetration
As predicted by the International Energy Association in October 2009, business and governments
will need to spend between US$ 2.4 trillion and US$ 3.4 trillion before 2050 on carbon capture
and storage projects, with the number of active projects reaching 3,400 by 2050 (Tait, 2009). It
is expected that Mantra’s ERC technology will first enter this market in 2012 with a total of four
projects. Improved economics and increasing partnerships will lead to increasing penetration
rates thereafter, reaching a total of 150 projects by 2019.
The following table shows Mantra Energy’s projected revenue from ERC over a 10 year period.
Assumptions:
For a detailed breakdown of the above tasks and associated costs, see Appendix E.
Invented in 1839 by Sir William Robert Grove, fuel cells are electrochemical conversion devices
that produce electricity from fuel (on the anode side) and an oxidant (on the cathode side),
which react in the presence of a catalyst. The reactants flow into the cell, and the reaction
products flow out of it, while the catalysts remain unaltered. Since the conversion of the fuel to
energy takes place via an electrochemical process (not combustion), the process produces zero
(or very few) emissions and is both quiet and highly efficient. (Wikipedia, Sept 2009).
Since their early invention, fuel cells have made significant progress. They have increased
in efficiency considerably, and have been adopted for use in many systems, both stationary
(hospitals, nursing homes, hotels, wastewater treatment plants, breweries, etc.) and mobile
(cars, buses, forklifts, etc. – all of which are under development).
While a variety of different fuel cells have been developed, all have faced one major barrier
to widespread adoption: cost. In 2008, the U.S. Department of Energy (DOE) reported that
fuel cell system costs in volume production are $73 per kilowatt. While this represents a great
improvement from the average cost of $1,000 per kilowatt seen in 2002, research suggests
these costs would have to be further reduced by over 50% in order to become competitive with
alternate technologies such as batteries and gasoline internal combustion engines. (Wikipedia,
Sept 2009).
In addition, secondary concerns for current fuel cell technologies include: durability, service
life and special requirements for some types of fuel cells. Stationary fuel cell applications, for
example, typically require more than 40,000 hours of reliable operation through a wide range of
temperatures. This is often considered a challenge given the structural components of current
fuel cell technologies.
Invented by Professor Emeritus Colin Oloman in the Clean Energy Research Center (CERC) at
the University of British Columbia Canada, the Mixed Reactant Fuel Cell (MRFC) is a fuel cell
with an unconventional architecture that eliminates the need for some operating features
and components. Unlike typical fuel cells that require a Proton Exchange Membrane (PEM) to
separate the fuel from the oxidant within the cell, MRFC mixes the fuel with the oxidant and
eliminates the need for the expensive yet fragile membrane.
Comparison between Conventional PEM Fuel Cell and Mixed Reactant Fuel Cell (MRFC )
As a result, Mantra Energy anticipates a simplified and much more cost effective manufacturing
process upon commercialization.
Under the direction of Dr. Oloman, the technical staff is currently undertaking feasibility studies
on the MRFC technology- using formate as the fuel. If successful, this will represent a significant
opportunity for Mantra Energy, as formate is one of the key products of ERC- the company’s CO2
recycling technology.
MRFC is currently in the critical stages of the patent application process, limiting the amount of
technical information and specifications that can be released at this time. More information on
the technology will be released shortly.
Mantra Energy signed a worldwide exclusive licensing agreement for MRFC with Prof. Oloman
in September 2009.
3.3 Market
Fuel cells provide direct current (DC) voltage as used to power motors, lights and electrical
appliances. There is a variety of fuel cells both available and under development today, each
competing with more conventional power sources such as gasoline engines and batteries.
Current applications can be divided into one of three market categories: stationary, mobile or
portable. The global fuel cell industry is expected to generate more than $18.6 Billion USD in
2013, and if significant advancements are made in the automotive (mobile) sector, this number
could jump as high as $35 Billion USD. (Energy Business Reports, July 2008).
Stationary
More than 2,500 stationary fuel cell systems have been installed globally in a wide variety
of applications, including: hospitals, nursing homes, hotels, office buildings, schools,
telecommunications, landfills, wastewater treatment plants and utility power plants. Such
systems can either be connected to the electric grid to provide supplemental power and backup
assurance for critical areas, or installed as grid-independent generators for on-site service in
areas that are inaccessible by power lines. (Fuel Cells 2000, Sept 2009).
Mobile
All of the major automakers are currently working to commercialize fuel cell cars, and several
have already entered the marketplace in California. In 2007, General Motors released the Chevy
Equinox FC powered by a PEM fuel cell. Honda later released its 2008 FCX Clarity model – also
powered by a PEM fuel cell. (Fueleconomy.gov, Sept 2009)
Fuel cells host great potential in their ability to power buses, boats, trains, planes, scooters,
forklifts and even bicycles, and manufacturers in these areas are continuously striving to make
fuel cells economical for mass production. While still relatively expensive, fuel cells are slowly
entering into these alternate mobile markets. In September, 2009, for example, Saul Paulo, Brazil
became the first city in Latin America to introduce fuel cell buses into their fleet.
Portable
Portable fuel cells can be further divided into two segments: fuel cell power packs and small
portable power generators.
Fuel cell power packs refer to battery replacement type applications. Examples would be fuel
cells packaged into portable devices such as laptop computers, cellular phones, digital cameras,
camcorders, and power tools. Portable devices are seen as employing up to 100-watt hours
of energy, with supplemental energy available through refueling cartridges. Examples include:
cellular phones (1-3 W), Computers (5-50 W), Camcorders (2-5 W) and Cordless Tools (20–200
W).
3.3.2 Competition
Mantra Energy faces both direct and indirect competition in entering the fuel cell industry.
Direct competitors consist of other fuel cell manufacturers, while indirect competitors include
rechargeable batteries, gasoline engines and gas turbines.
Direct Competition
There is currently a large list of fuel cell manufacturers working on the aforementioned
technologies in an effort to penetrate those market segments mentioned in Section 3.3. The
following is a sample list of manufacturers currently involved in each market segment:
While the percentage of fuel cells manufactured and sold by technology type has remained
fairly constant in recent years, certain fuel cells have the potential to become the dominant
technology for automotive engines, power stations, and power packs for portable electronics.
The fuel cell market is currently dominated by Proton Exchange Membrane (PEM) fuel cells- a
technology using a proton-conducting polymer membrane to separate the anode and cathode
sides. While these fuel cells can operate at relatively low temperatures and have a high power
density, they are still expensive in comparison to alternative forms of conventional energy, and
can be fragile in construction.
The following is a brief summary of PEM technology, along with other popular fuel cell
technologies under development today. (Fuel Cells 2000, Sept 2009).
Indirect Competition
Other than electricity generation through traditional fossil fuel combustion, batteries,
rechargeable batteries in particular, are fuel cells’ main competition. The following is a summary
of rechargeable batteries currently under development and in use as alternate forms of energy
conversion:
• Size: Fuel cells can be compact and light weight in comparison with conventional batteries
• Temperature Tolerance: Unlike batteries, fuel cells do not degrade at high temperatures and their range can
be between -40oC and +50oC
• Environmental Impact: Fuel cells do not use combustion, therefore very little CO2, NOx, SOx or particulate
emissions
• Economic Feasibility: Lack of Proton Exchange Membrane (PEM) should provide for a simplified and much
more cost effective manufacturing process upon commercialization.
• Durability: MRFC design eliminates the need for fragile components as found in other fuel cell designs.
• IP Protected: Currently undergoing patenting process, making the above advantages sustainable over the
long term.
Helpful Harmful
to achieving the objective to achieving the objective
Strengths Weaknesses
S
• Unique, patent pending technology that is more
W
the environment
Opportunities Threats
O T
the environment
External origin
• Fuel cells recognized as potential replacement • Current economy harming investors’ willingness
attributes of
The mixed reactant fuel cell is currently in the early stages of development, and the technical
staff is currently undergoing feasibility studies under the direction of Prof. Emeritus Oloman. In
collaboration with Kemetco Research Inc., the following steps must now be taken by Mantra
Energy to take MRFC from its current stage through to the completion of a pre-commercial
prototype:
• Acquire both test equipment and fuel cell materials necessary for development
• Development of cathodes, including both catalyst and structure
• Development of anodes, including both catalyst and structure
• Development of gas injection system
• Cell analysis and development, including geometry, operating conditions, flows, temperature and pressures
• Fuel cell design work
• Systems integration and controls
• Overall manufacturing study
• Installation
The above will be completed within two years. A breakdown of the costs associated with the
above development plan is outlined in Section 3.5.1.
For a detailed breakdown of the above tasks and associated costs, see Appendix G.
4. Summary
In conclusion, Mantra Energy currently has a vested interest in two innovative technologies
that show virtually unlimited market potential: the Electroreduction of Carbon Dioxide and
the Mixed Reactant Fuel Cell. Over the next two years, Mantra Energy plans to expedite the
development of these two technologies by building a pilot scale on-site demonstration unit
capable of converting 100 - 500 kg of CO2 per day, as well as an MRFC pre-commercial prototype.
The costs of these two projects will be $2.18 Million CDN and $0.98 Million CDN (respectively)
over the next two years, for a total development cost of $3.16 Million CDN.
Upon completion of the two aforementioned projects, ERC will be ready for off-take licensing
agreements and full implementation into industry, and MRFC will move to the on-site
demonstration scale.
References
American Chemistry (November 2003). Hydrochloric Acid-HCI- An Acid With Many Uses. Retrieved March
10, 2009 from http://www.americanchemistry.com/s_chlorine/sec_content.asp?CID=1255&DID=4735&C
TYPEID=113
Dunia Frontier Consultants (June, 2008). Dunia Formic Acid Survey. http://www.dfcinternational.com/
files/DuniaFormicAcidSurvey15June2008.pdf
Energy Business Reports (July, 2008). Fuel Cell Technology and Market Potential. Retrieved Sept 2, 2009
from http://www.energybusinessreports.com/shop/item.asp?itemid=790
Environmental Protection Agency (2006). Industrial Processes. Retrieved March 12, 2009 from http://
www.epa.gov/climatechange/emissions/downloads06/07Industrial.pdf
Fairley, Peter (Aug 2009). Where Europe Buries Carbon. Retrieved Aug 25, 2009 from www.spectrum.ieee.
org/energy/fossil-fuels/where-europe-burries-carbon
Fairley, Peter (Aug 8, 2009). Schwarze Pumpe Hits a Bump. Retrieved Aug 25, 2009 from www.spectrum.
ieee.org/blog/energy/renewables/energywise/schwarze-pumpe-hits-a-bump
Fuel Cells 2000. (Sept. 2009) Fuel Cell Basics – Applications. Retrieved Sept 8, 2009 from: http://www.
fuelcels.org/basics/apps.html
Fueleconomy.gov (Sept. 2009) Fuel Cell Vehicles. Retrieved Sept 8, 2009 from: http://www.fueleconomy.
gov/feg/fcv_sbs.shtml.
Murphy Analytics (January, 2009). ERC Technology Converts CO2 from Pollutant to Asset. www.
murphyanalytics.com
Oloman, R (July 16, 2008). Carbon Recycling- An alternative to carbon capture and storage. Retrieved
Sept 2, 2009 from http://www.examiner.com/x-4230-DC-Green-Business-Examiner~y2009m7d16-Oped-
Series--Rowan-Oloman-Carbon-Recycling--An-alternative-to-carbon-capture-and-storage
Sethuraman, Dinakar (June, 2008). Carbon price must rise, IEA Director says. Retrieved Aug 21, 2009 from
http://www.financialpost.com/story-printer.html?id=1674049.
Tait, Carrie (October 13, 2009). Canada could cash in on climate change battle. The Financial Post. Retrieved
October 13, 2009 from http://www.financialpost.com/story.html?id=2096081
Wikipedia (Sept, 2009). Fuel Cell. Retrieved Sept 3rd, 2009 from: http://en.wikipedia.org/wiki/Fuel_cell
Appendices
Appendices available upon request.