The company also has a two-year option for an exclusive Australian and New Zealand licence for use of the environmentally friendly technology, which is designed to convert coal and other solid organic materials into low-molecular weight, water-soluble products.

Greenpower will contribute $2 million over a two-year time frame to Thermaquatica’s development of the oxidative hydrothermal dissolution (OHD) process, as it applies to coal-to-liquids conversion.

The companies signed a memorandum of understanding in February to work together to bring the OHD process to commercial use. The latest agreement advances that objective.

Director of Greenpower, Gerard King, and chief executive of Thermaquatica, Ken Anderson, signed the agreement in Carbondale, USA.

OHD works by the reaction of coal, or other macromolecular organic solids, with small amounts of oxygen in high-temperature (220-370C), high-pressure water.

The principals of Thermaquatica, led by Anderson, developed the OHD process under the auspices of the University of Southern Illinois, which holds the patent for the process.

Southern Illinois University has granted a universal licence over the OHD process to Thermaquatica to continue development, testing and, ultimately, commercialisation of the OHD process.

Greenpower holds exploration mining tenements in Australia’s Latrobe Valley containing inferred resources of lignite estimated at over 500 million tonnes.

It has been assessing processes to convert that coal to liquid hydrocarbons to make transport fuels and petrochemicals in an environmentally acceptable manner.