The agreement is in lieu of the formally announced joint venture agreement via a memorandum of understanding signed between the partners in January, and is intended to enable each company to develop its core business model.

It will enable Jindal to focus on supplying dry, high quality coal to their steel and power business in India while Clean Coal will be able to focus on the development and marketing of its technology to third parties.

Under the agreement, Clean Coal will receive an on-going royalty fee of $US1 per metric ton on all coal processed from Jindal majority-owned mines in Southeast Asia.

Clean Coal will also receive up to 4 million tons per annum with a waiver of additional royalty fees on further processed coal up to a total of 8Mtpa.

In addition to the royalty fee, Jindal will pay CCTI a one-time license fee of $750,000.

The license fee will be paid in two instalments, with the first $375,000 upon signing of a pilot plant construction contract and $375,000 upon the successful testing of Jindal's Indonesian coal.

Construction of a pilot plant in Oklahoma will kick off upon the execution of an engineering, procurement and construction contract by the JV, which is anticipated for some time this month.

The pilot plant is scheduled to be completed within 16 to 24 weeks, with testing of Jindal’s coal to take place prior to the end of 2012.

Clean Coal chief executive officer Robin Eves said the royalty agreement was a major boost for the company.

“With this, CCTI has added a second important commercial client in Indonesia that intends to commence construction of a commercial plant immediately after the testing of its coal at the pilot plant,” he said.