Carbonxt Group: Purpose-Built Advanced Carbon for Healthier Communities

Carbonxt Group (ASX:CG1) is well-positioned to take full advantage of the opportunity offered by the rapid expansion of industrial use cases for activated carbon which typically comes in one of three forms: powdered, pellet and granular. Depending on how the material is treated post-oxidation, activated carbon can be tailored to a multitude of individual use cases. For large-scale use, material costs can range from US$2,000 per tonne to as high as US$6,000 per tonne, presenting a considerable opportunity.

Much of this growth will be courtesy of a new Kentucky facility focused primarily on water treatment. This facility will leverage two pieces of legislation recently announced in the United States — the Environmental Protection Agency's (EPA’s) Clean Water Act and the Bipartisan Infrastructure Deal. The former aims to reduce pollution caused by polyfluoroalkyl substances (PFAS), while the latter provides a total of $10 billion in funding to help companies reduce PFAS contamination.

PFAS are a set of widely-used chemicals that take an incredibly long time to break down. Carbonxt provides products specifically targeting PFAS removal. Through the NewCarbon joint venture, the company intends to convert a waste-to-energy plant into an activated carbon plant, considerably increasing its production capacity and allowing it to directly serve the roughly 50,000 water utilities in the United States, which together account for roughly 50 percent of the granular activated carbon market.

Carbonxt designs specialized activated carbon products for its customers, which consist primarily of industrial sector organizations and power utilities. Available in pellet and powder form, the company's oxidizing, non-brominated activated carbons are non-corrosive and designed to remain efficient throughout their entire lifecycle. Although Carbonxt’s origin and listing is in Australia, its products are manufactured and distributed exclusively within the United States.

Company Highlights

• Carbonxt Group is a manufacturer of patented activated carbon products designed to treat toxic pollutants in both air and water.
• Carbonxt currently has an addressable US market of US$290 million with a 5 percent market share. Its recently finalized joint partnership with Kentucky Carbon Processing has the potential to increase this market to more than $900 million.
• Together, Kentucky Carbon Processing and Carbonxt will form the joint venture company NewCarbon, affording Carbonxt several advantages:
  • Increased US-based production capacity to 21,000 tons with the potential for further expansion.
  • Control over input costs, considerably improving base margins.
  • High-quality raw materials.
• In the near future, much of Carbonxt's growth will be driven by the United States Environmental Protection Agency's increasing regulation of PFAS.
• There are currently 50,000 water utility companies in the United States, 4,000 of which serve 10,000 or more customers. Collectively, they account for roughly 50 percent of the granular activated carbon market with annual expenditures of over US$300 million.
• Carbonxt is well-positioned to serve these companies, providing activated carbon pellets that offer improved filtration with a lower pressure drop as a replacement for granular activated carbon.
• The company is working with Kentucky Carbon Processing to convert the Inez waste-to-energy plant into an activated carbon plant. It expects the new plant to be operational by the end of 2023.
• In addition to a highly experienced leadership team, Carbonxt’s strong revenue and earnings growth potential from NewCarbon make the company an attractive investment prospect.

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