The global activated carbon (AC) market was estimated to be valued at USD 4.4 billion in 2023, with projections indicating growth to USD 8.4 billion by 2030. This represents a compound annual growth rate (CAGR) of 9.8% during the forecast period (2024-2030). Key market drivers include stringent environmental regulations for water treatment in the U.S. and the increasing importance of air pollution control, particularly in mercury (Hg) removal applications.
Figure 1: Carbonxt Group Limited
Carbonxt Group Limited (ASX: CG1) (the “Company” or “Carbonxt”) is a leading provider of premium AC products and solutions. The Company’s innovative products and services are used in various industries, including air and wastewater treatment, waste management, and renewable energy. With its strong track record of innovation and customer satisfaction, Carbonxt Group is well-positioned to capitalise on the growing demand for AC.
Figure 2: Global Activated Carbon Market Size
The Company has three production facilities – a powdered-AC facility at Black Birch (Georgia) and a pelletised activated carbon facility at Arden Hills (Minnesota) that have been operational for over 5 years and are delivering consistent revenue. The third new facility is nearing completion and is a joint venture (JV) with Kentucky Carbon Processing (KCP). The plant will produce AC products catering to the U.S. AC market’s water treatment (Liquid Phase) segment. The plant will have an initial capacity of 10,000 tons per annum, with the ability to expand to 20,000 tons per annum. This facility will be fully operational in Q1 2025.
With the commencement of the Kentucky plant, Carbonxt will produce the complete range of industrial-scale AC in powder, pellets and granular variants. The Company expects a highly favourable change in the volume and profits of the business.
Recent Company Announcements Indicate Strong Revenue Potential in FY2025
Carbonxt Group’s capacity expansion clearly demonstrates its alignment with the growth trajectory of the U.S. AC market. Based on its current area of specialisation (Air Phase), Carbonxt has an addressable market in the US valued at USD 290 million, holding an approximate 4% market share. The EPA estimates that annual compliance with the new regulations could cost between USD 772 million and USD 1.2 billion for water utilities.
Figure 3: Operating Targets of the New Kentucky Facility
In May 2024, the Company’s largest customer, Wisconsin Public Service (WPS) agreed to sign a binding purchase order for Activated Carbon Pellets (ACP) valued at USD 4.3 million. The agreement includes 6 months supply of activated carbon pellets. WPS publicly affirmed that the Weston Power Plant (‘Weston’) will remain operational until 2032.
Figure 4: U.S. Activated Carbon Total Addressable Market
Carbonxt has a long-term partnership with Wisconsin Public Services as the sole supplier of AC pellets at Weston Power Plant. Wisconsin Public Service will utilise Carbonxt’s proprietary ACP product in its ReACT (regenerative activated coke technology) emissions control systems. This integrated multipollutant approach targets nitrogen oxides (NOx), sulphur oxides (SOx), and Hg emissions from coal-fired plants.
In July 2024, Carbonxt Group secured an AUD 24 million four-year contract extension to supply premium PAC products from the Company’s wholly-owned Black Birch facility to Reworld, an existing Carbonxt Group customer and a global leader in sustainable waste solutions.
In September 2024, the Company received firm commitments to raise USD 3.02 million by issuing 46.4 million new fully paid ordinary shares at USD 0.065 per share via a Share Placement. The funds will be used to fund the next instalment payment for NewCarbon Processing LLC for the construction of the new facility in Kentucky and general working capital purposes.
Carbonxt Managing Director Mr Warren Murphy stated, “We thank all existing shareholders for their strong support and welcome onboard several new shareholders. We expect to make a further payment to our Kentucky investment company, New Carbon Processing, LLC very shortly and look forward to being able to update you on the significant scale-up of our business as the plant comes online. Once again we thank everyone for their support and look forward to a fascinating period for the Company as we add materially to production volumes and strengthen our position as a trusted and dependable supplier of premium Activated Carbon products in the large U.S. market.”
In August 2024, the Company was awarded a USD 159,000 research grant by the Florida State Government to advance a water remediation study. This research is aimed at combatting the negative impact of Red Tide algae on coastal communities. In partnership with Mote Marine, CG1 aims to develop research in this lucrative field to pelletise new environment-friendly algicides combined with AC.
Mr Murphy stated, “The contract will provide Carbonxt with a material boost to net operating cash flows at an important juncture in our stated development strategy, with major growth upside through the forthcoming commissioning and manufacturing launch of Kentucky’s flagship AC production facility. With strong market conditions for activated carbon products and ongoing commercial discussions for additional sales contracts from existing operations, Carbonxt is well-placed to capitalise on its strong market position to generate a step-change in group revenues and EBITDA in H2 2024.”
Investor’s Outlook
- Carbonxt currently focuses on air phase applications, estimating an addressable market of around USD 290 million in the US, holding a 4% market share. A new facility in Kentucky is being established. The Company aims to expand its scope into water treatment. The liquid phase market presents a significantly larger opportunity than the air phase AC market
- Carbonxt’s joint venture with Kentucky Carbon Processing (KCP) aims to facilitate expansion into high-margin markets. They plan to utilise the Inez Power AC Plant to produce pelletized and granular activated carbon from coal-based sources
- As of October 10th, 2024, Carbonxt Group’s shares traded at AUD 0.069 per share, with a 52-week range of AUD 0.068 – AUD 0.120. The Company’s market capitalisation is AUD 24.6 million, with 371.34 million shares issued
