A joint state and federal funding scheme will see millions spent showing new ways to use brown coal.

Federal Minister for Industry Ian Macfarlane joined with the Victorian Deputy Premier Peter Ryan and Minister for Energy and Resources Russell Northe to announce the $50 million funding for two advanced coal projects.

The money will be spent on two demonstration plants, which will produce high-value products including oil, fertiliser and upgraded coal.

Federal Minister for Industry Ian Macfarlane said the money will help secure a future for Victorian brown coal reserves.

“This program is designed to accelerate the development of new technologies which could drive new industries and make a significant economic contribution,” Mr Macfarlane said.

“The projects being announced today are about making progress toward clean solutions for capitalising on this rich resource and seeing a bright future for the Latrobe Valley and its community.”

The funding requires the companies undertaking the projects to meet stringent milestones, indicating positive progress on overall outcomes.

Coal Energy Australia has been granted $30 million for the development of a demonstration plant producing fertiliser, oil and high value coal used in steelmaking.

The company will build a pre-commercial lignite upgrading plant to process high value metallurgical-grade carbon and other hydrocarbon products.

It will also be geared to make three products; low volatile solid fuel or char – a substitute for PCI coal in steel manufacture; pyrolysis oil, which can be distilled into various oils, including diesel oil for industrial heating; and ammonium sulphate for use as a fertiliser or soil conditioner.

In the second project, Ignite Energy Resources has been granted $20 million for the development of a pre-commercial plant, producing upgraded coal products and synthetic oil for refining into fuel sources such as diesel and petrol.

The Ignite site will use the company’s ‘catalytic hydrothermal reactor’ technology to rapidly convert lignite into an oily coal, which can be separated into high energy products.

The company will produce oily coal, synthetic crude (Syncrude) and micronized upgraded coal.

The projects have been funded under the 50:50 State-Commonwealth Advanced Lignite Demonstration Program (ALDP).