The project will use the Coldry Process – a dewatering technology that creates high energy, clean-burning pellets from lignite (brown coal).

The $2 million debt finance facility will be used to complete the test plant, while the money received from the Victorian Government will help to develop the Coldry technology’s water recovery process.

ESI expects the Bacchus Marsh plant to be operational by early 2007, prior to the start of a 60-day demonstration trial.

Designed to prove the technology's commerciality, the pilot plant is expected to be fully operational by next year, before the start of the demonstration trial.

ESI aims to harvest 20 million tonnes of water from the 20Mt of dried brown coal pellets produced annually for export by 2020.