Concept Summary for Building a Clean Power Company Based on Calcium Carbide Robert Chew Greenwich, CT Cellular: 713-899-4522

rpchew1@aol.com Due to the recession which has impacted the steel industry and its demand for anthracite coal from eastern, PA in addition to the soft demand for coal-fired generation due to drop in over all power demand and concern on coal emissions from power plants that has weaken demand for lime, the timing is right to build a vertically integrated energy company based on calcium carbide as the base feedstock to make a high BTU and clean burning fuel for stationary power plants. The clean fuel produced for power generation will be acetylene gas which will be produced at stationary power plants from calcium carbide shipped from a production facility in eastern, PA. Calcium carbide is also a very valuable feedstock for plastics and chemicals. The value of calcium carbide for energy is approximately $100 to $200 per MT and for chemicals, $500 to $700 per metric ton. At $100 per MT for calcium carbide, the cost of acetylene gas would be around $6 per MMBTUs. The company would sell calcium carbide into both the chemical and the power business in order to maximize profits and to have a diversified customer base. Calcium carbide was one of the most important chemicals discovered in the 19th century. Calcium carbide was originally produced from two plentiful and low cost materials being metallurgical coal and lime. Before petroleum became the dominant feedstock for chemicals and plastics, Union Carbide was created in Michigan in 1917 to produce calcium carbide from anthracite and from lime using an electric arc furnace. In order to create a low cost clean power company and create a more competitive feedstock for the chemical and pig iron industry, one needs an inexpensive source of carbon, lime and electricity to power the electric arc furnace to turn lime and coal into calcium carbide. Calcium carbide when combined with water produces acetylene gas which has a high calorific value of over 1,400 BTUs/FT3. To create a steady demand for the acetylene gas, the company will acquire and own stationary packaged power plants that run on diesel and natural gas and convert them over to acetylene gas for base loaded generation for retail customers. In order to convert the power plants over to acetylene gas, a company in the United States which holds the patents is willing to merge into a new company that is vertically integrated from producing calcium carbide to generating power. Calcium carbide is grey, black, brown or purple depending on its purity. When the solid material is purple, it is at its highest purity. Calcium carbide has a specific gravity of 2.22 and a melting point of 2,300C. The product can absorb water and conduct electricity. The product can absorb air, water and conduct electricity. Calcium carbide is an important basic material in organic synthesis industry. Acetylene obtained from calcium carbide is a raw material to make ethylene, chloroprene rubber, calcium

cynamide, acetic acid, acetaldehyde, ethyl acetate, cyamide acetate, dicyandiamide, acetone, octonol, trichloride and ethylene. Chloroprene rubber (Neoprene ) is created by dimerizing acetylene to give vinyl acetylene which is combined with hydrogen chloride to make rubber. Calcium Cyanamide (CaCN2) is used as fertilizer, formed when calcium carbide reacts with nitrogen (CaC2 + N2 + CaCN2 + C). When water is added in the fields where the fertilizer is added, ammonia is created. Acetic acid is basically vinegar (CH3COOH). 6.5 million MT of acetic acid is produced annually. Aceteldehyde is an organic chemical (CH3CHO) which occurs naturally in coffee, bread and in ripe fruit. The chemical is used as an intermediary in the production of acetic acid. 336,000 MT of the chemical are produced annually in the United States. Acetone is an organic chemical and is miscible with water. It is an excellent solvent (Nail polish remover). The chemical is used to stabilize acetylene. One liter of acetone can dissolve 250 liters of acetylene, making acetylene safe to transport. Ethylene (C2H4) is the most produced organic chemical in the world. Over 110 million metric tons are produced annually. Because ethylene contains a carbon-carbon double bond, it is called an unsaturated hydrocarbon or an olefin. Calcium carbide is used as a desulfurizer and dehydrant of pig iron and is used for cutting and welding metals as acetylene gas. Acetylene gas is 92.2% weight carbon and 7.8% hydrogen. The gas is 10% lighter than air. China is currently the largest world producer of calcium carbide with over 8 million tons produced annually while the United States produces less than 200,000 MT annually. Pure Calcium Carbide

In order to control the cost of producing calcium carbide, the company will acquire at least one anthracite mine and one limestone quarry. Calcium carbonate (Limestone) is converted to calcium oxide by calcining the limestone at 600C in a rotary kiln in order to drive off CO2, leaving CaO (CaCO3 plus heat = CaO + CO2). Lime is combined with a clean source of carbon such as anthracite or charcoal and then melted at 2,000C to produce calcium carbide (2CaO + 5C = 2CaC2 + CO2). Calcium carbide (CaC2) with water produces acetylene (C2H2) and calcium hydroxide (CaC2 + H2O = C2H2 + CaOH2). The calcium hydroxide (CaOH2) slurry can be recycled to make more calcium carbonate by absorbing CO2 at ambient temperature (Ca(OH)2 + CO2 = CaCO3 + H2O). The CO2 emissions coming off of the lime kilns could be recycled with calcium hydroxide in order to be a low CO2 emitter into the atmosphere. The overall energy efficiency of converting lime and coal into calcium carbide and then into acetylene gas is around 80%. To produce one metric ton calcium carbide one needs the following inputs: 991 kg of Lime (2185 lbs)# 683 kg of Clean Coal (1,506 lbs) 20 kg of electro paste (44 lbs) 246 kW of power for an electric arc furnace at 2,000C. # It is expected that the company will be able to recycle calcium hydroxide which is formed from the production of acetylene gas, reducing the demand for new lime from outside sources by over 40%. For every pound of calcium carbide; with water one can produce 4.7 FT3 of acetylene gas with an average BTU content of 1,400 BTUs/FT3. One metric ton of calcium carbide will produce 10,250 FT3 of acetylene, equivalent to 14.3 million BTUs. 14.3 MMBTUs is enough fuel to produce 1.2 MW of power using reciprocating engines, the cheapest generation capacity available. Large stationary engine power plants can be installed for less than $500 per kW-installed. To minimize costs, the company will produce calcium carbide at the anthracite mine in eastern, PA and bring in lime for processing from a limestone quarry for processing. Anthracite coal could be used to produce heat to turn limestone into lime and to produce cheap power for the electric arc furnace; some acetylene will be burned in an onsite packaged power plant unless natural gas is available and economical for power generation. Calcium hydroxide will be used to absorb CO2 from the lime kilns. Based on the internalized cost for anthracite estimated at $56/MT clean, lime at $40/MT and self generated power at $.09/KWh in addition to conversion costs, the COGS for acetylene will be around $6/MMBTUs. Assuming that power from an onsite power plant is selling the power directly to the end user (Inside-the-fence) at $.12/kWh, one will be creating $144 of value per MT of calcium carbide which would have cost $90 per MT to produce at an anthracite mine in eastern, PA. Margins will be higher if the production of high grade calcium carbide is sold into the steel and chemical industries.

During the time that it is required to permit an electric arc furnace at the anthracite mine the company will be cash flow positive by selling anthracite and lime into the traditional markets which are currently in a recession and starting an inside the fence power company using a line of credit for power plants built by ARE-Energy in Roanoke, VA. ARE Energy has offered an immediate line of credit to start a power business using their power plants which will create an immediate profit center for the power group. Once the company has the fuel available, power plants will be located in high cost power regions of the United States such as the Northeast. ARE Energy (www.are-energy.com ) is a private company that has been recycling locomotives and refurbishing the engines into power plants using Enercon as the integrator. Self contained power plants are expected to cost less than $350 per kW-installed with a capacity of 1MW to 3 MW. To create a power company in the United States, new plants will be installed and some existing plants will be acquired and repowered with acetylene. Basically, the company will have 3 divisions. The 3 divisions are the following: A. Mining & Processing of Anthracite and Limestone B. Power Service & Generation C. Calcium Carbide Production & Marketing The mining and processing will be formed by the acquisition of one or two anthracite mines near Hazelton, PA. Robert Chew has negotiated and evaluated the acquisition of 3 anthracite mines in PA in 2008 and 2009. The estimated acquisition costs for an anthracite mine with at least 5 million tons of recoverable anthracite for strip mining and produces 100,000 MT of clean anthracite from a coal washing plant will be around $15 million with a portion coming from an earn out for the current mine owners for an operation that currently can produce 100,000 MT of clean and sized anthracite annually. Depending on the actual mine acquired that has already been evaluated, EBITDA based on a number of mine enhancing business plans could create an EBITDA from mining between $2 million to $22 million. One can combine an anthracite operation near Hazelton, PA with an operation in Tamaqua, PA. There is a very large anthracite mine in bankruptcy which could be acquired with over 9,000 contiguous acres of mining property with over 100 million tons of recoverable anthracite. One can obtain control of the mine by buying the debt held by creditors such as the Toll Brothers. Local executive talent from the anthracite region has been identified to run the mining operations. The first plant to be built for calcium carbide is expected to be 500 MT per day of output for an annual production of 150,000 MT of calcium carbide which is enough fuel to supply 25 MW of base loaded generation 24 hours per day. If all the calcium carbide was sold into the existing markets for the product, the electric arc mill will generate over $60 million of revenues. If the mills production was allocated to the power industry, gross revenues would be around $22 million. Long-term, the company would have a diversified market with production going to support the high margin chemical industry and the lower margin power industry. Revenues will also come from the tradition markets for anthracite which are the steel, iron ore and home heat markets. As the demand for calcium carbide and acetylene increases, additional calcium carbide mills will be built in

regions that have clean high grade metallurgical coal. A preliminary budget for an electric arc processing plant has not been completed. Overall business model is a low carbon footprint to turn high grade coal into clean fuel and chemical feedstock. The CO2 produced in the industrial processes will be absorbed by calcium hydroxide allowing the company to reduce the cost of lime used to make calcium carbide. Typical Small Anthracite Strip Mine (5,000 MT/Month Output)