Synthesis Energy Systems, Inc. (NASDAQ: SYMX) is teaming up with China Environment State Investment Company (CESI) in a joint venture gasification project that will see them invest about $307 million in a Chinese county. The project appears focused on capitalizing on the growing quest for clean energy, which has been reinforced by the Paris climate agreement.
CESI is an agency under China’s ministry of environmental protection. Among other things, its mandates include developing and investing in projects geared toward energy and environmental conservation. As part of carrying out its conservation duties, CESI is collaborating with Synthesis Energy Systems, Inc. (NASDAQ: SYMX) to build hydrogen production platforms at an industrial park in Lijin County.
What are the Synthesis Energy Systems, Inc. (NASDAQ: SYMX) platforms all about?
Synthesis said in a press release that building out the hydrogen production platforms will cost an estimate $307 million. The first phase of the project is expected to consume $107 million in investment and it will be dedicated to production of high purity hydrogen.
The hydrogen generated by the Synthesis-CESI project will be used by refineries in Lijin County in production of clean fuel.
China’s drive to clean energy
China is one of the countries that have stepped up efforts to power their economies with clean fuel curb air pollution and reduce the rate of global warming due to greenhouse gas emissions. The recently signed Paris climate deal further puts more weight on the need to curb release of greenhouse gases into the atmosphere. Therefore, Synthesis and CESI are anticipating strong demand for their hydrogen once they start producing at the Binhai New District industrial park.
Ownership of the project
Initially, Synthesis Energy Systems, Inc. (NASDAQ: SYMX) will own 49% of the project and CESI will have the majority stake of 51%. However, the partners hope to bring more investors on board as the project progresses and expands.
Synthesis’ financial performance
Synthesis Energy Systems, Inc. (NASDAQ: SYMX) reported revenue of $1.3 million for its F3Q2016, a pullback from $2.8 million in the like quarter in 2015. The posted EPS loss attributed to shareholders of $0.03, better than EPS loss of $0.05 in the year ago quarter.