Neumann proposes rare-earth metals extraction business for downtown plant

Neumann Systems Group has another plan to make coal-fired power plants more environmentally friendly.

The company that has been battling to save the Martin Drake Power Plant and it’s coal-cleaning Neustream technology that’s used there, says its newest venture could amount to 250 high-tech jobs, $400 million in construction projects and $150 million in sales.

Neumann created NeuMetals earlier this year, with the goal of extracting rare earth metals from fly ash, the leftover product from coal-fired power plants. The technology is similar to that of the NeuStream, which is in jeopardy if the Drake plant is closed as the result of a study due in mid-2013.

Neumann has filed three patents for the NeuMetals process, which he says has the additional benefit of using carbon dioxide from the power plants to extract the metals. The 14 metals that can be extracted include neodymium, europium and yttrium, all critical elements to high-tech companies.

“We’ve had great success extracting the metals from the fly ash,” he said. “Overall, we can remove about 60 percent of the metals, some of them we can remove 100 percent.”

The big payoff won’t come immediately. Neumann plans to start the project as he did the NeuStream, about 1/20th of its eventual size. By year two, he’ll start construction on a 100,000 square-foot facility.

And it will pay for itself, he says. But he’ll start with a $10 million grant from the Department of Energy, already applied for, and money from venture capitalists.

“I have people who are very interested in this,” he said. “It’s a way of getting these rare-earth metals, and it’s a way of cleaning up the coal-fired plants.”

The project won’t cost Colorado Springs Utilities a dime, he says. He wants to put the facility at Drake, so the city will reap the benefits of the jobs, sales-and-use taxes and economic development. However, he said it could also be placed at the Ray Nixon Power Plant in El Paso County.

“Or, it could go anywhere in the nation,” he said. “We need a coal-fired power plant, but we could use any one of those.”

Once the facility is started at a small level, the economics work out, he said. Basically, Neumann says the “green chemical process” will extract about $700 worth of rare-earth metals per ton of fly ash. It only costs $250 per ton to extract them.

“So there’s revenue potential there,” he said.

Neumann will make his proposal to the Board of Directors for the Colorado Springs Utilities at its January meeting. He’s hopeful that the board will approve the proposal and he can get started.

But it might not be that easy.

Tim Leigh, a board member and City Councilor, has been a long-time critic of the NeuStream, NSG’s first partnership with CSU. In that project, CSU agreed to pay a total of $121 million for the coal scrubber which will remove sulfur dioxide from coal emissions, helping the power plant reach compliance with federal regulations.

“If he brings $20 million to the table, I’ll listen with an open mind,” Leigh said of the new proposal. “It’s using Utilities as the guarantor that I find reprehensible.”

And Leigh says he won’t support it at Drake, which he thinks should be de-commissioned.

“That’s going to have to go as we have to meet expected federal regulations,” he said.

Leigh has another problem: the timing of Neumann’s announcement.

“I think it would have been better to show the proposal to the board before going to the press,” he said. “But that can be worked out.”

Mayor Steve Bach was among the first leaders who suggested that Drake be de-commissioned and torn down in order to stimulate economic development downtown. He’s urged the board to study the issue.

When asked to comment about the latest suggestion from NSG, Bach said, “I hope that City Council, acting as the Utilities Board, will obtain outside, expert counsel in considering this proposal.”