WTR signs framework agreement with Absolicon to acquire Production line in Peru

Härnösand 2020-04-08

 

Environmental technology company Waste away Tecnologias para Residuos SAC (WTR) has signed a framework agreement with Absolicon to acquire a production line for the T160 solar collector in Peru. The total sales value covered by the agreement is estimated at € 4-5 million, a monthly license fee of 4% and sales of components.

Absolicon’s production lines for concentrating solar collectors can change the energy supply of individual industries and entire cities. The western part of South America with Peru, Chile, Bolivia, Ecuador and Colombia has many locations with very high solar radiation.

WTR and Absolicon have now signed a framework agreement for the acquisition of a production line for establishment in Peru to provide the region with advanced solar collectors.

The collaboration builds on the experience of Luis Felipe Olaechea Alva and his brother Julio Arnaldo Olaechea Alva who together have imported and commercialized sustainable technology into the agricultural, food and mining industries for 35 years.

The company that is now signingt the framework agreement is one of the companies that the brothers control together. WTR has been formed to commercialize sustainable recycling technologies in the food industry and the company will now broaden its focus to include solar energy.

Over the years, the founders of the company have had business with over 1800 municipalities and many companies in the food and waste industry.

The market segments for Absolicon’s solar collector technology where WTR already has business relationships are:

•  The food and beverage industry

• Mining industry in South America with companies such as Nexa Resourses, Buenaventura and Goldfields.

• Fishing industry such as Pesquera Hayduk with 6 factories.

Future market segments may also include:

• Energy for desalination plants

• Solar district heating for the 9 million people living over 1000 m above sea level

Content of the framework agreement

The framework agreement describes the separate agreements to be drawn up in the process. Absolicon’s proceeds from the sale can be grouped into three groups: acquisition of the line, license revenue and revenue from material sales.

1. Sale of the production line

The production line is of the same model as Absolicon has in Sweden and which the company has already delivered to Sichuan Province. The line with two six-axis robots has the capacity to produce 50 MW solar collectors (100,000 m2) per year. Together with the hardware, Absolicon provides consulting support for marketing and technical support, development and technical training.

The total value of hardware and activities covered by the agreement is estimated at € 4-5 million.

2. License to manufacture T160

For the right to manufacture T160 under Absolicon’s intellectual property protection, take part in future product development and use Absolicon’s trademark, a monthly license fee of approximately 4% applies to the sales value.

The production line in full production produces on a shift 50 MW solar collector (100 000 m2) per year with sales value € 20-25 million which with 4% license fee would mean about € 800 000 per year in license revenue. Absolicon’s estimate, however, is that it will take time for WTR to develop the solar thermal market for industries in the region so that those volumes can be achieved.

3. Material supply

Through the agreement, Absolicon ensures access to patented components and high quality inputs partly manufactured in Peru or locally at the installation site.

At full production, the production line needs to buy materials for € 10-15 million per year where 40% – 50% of purchases may go through Absolicon and 50% – 60% from local subcontractors. The outcome for Absolicon depends to some extent on the result of Absolicon’s ongoing material investment.

The framework agreement sets out overarching principles

The framework agreement is not binding, but provides for the overall principles of the separate agreements to be drawn up. The estimated value of sales is subject to change as well as the definitive design of the production capacity of the production line. Absolicon estimates today that the sales value of the agreement is at the lower end of the range of € 4-5 million.

If WTR fails to meet its commitments at each stage, they lose the right to complete the acquisition and are then able to recover part of the purchase price, but never for Absolicon’s incurred costs.

Next steps

In this case, negotiations for the signing of the framework agreement have been fast and work is still in its early stages. Diskussions have just begun on the first pilot installations of the T160 in Peru. More detailed contract writing is now taking place. Payment is made step by step in the same way as in the previous sale of the production line to the province of Sichuan.

 

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