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Brown coal projects fail to nab $90m on offer

Two major proponents of new brown coal projects in the Latrobe Valley have revealed they missed out on government grants, narrowing the field of companies in line to share $90 million on offer.

In statements to the stock exchange on Friday, companies Exergen and Environmental Clean Technologies both said their applications had been unsuccessful for federal and state government cash under a grant scheme to demonstrate new brown coal technology in the Valley.

The $90 million program was first announced in 2012, but has been highly secretive about which firms had applied and were shortlisted. Sources said an announcement on grants is expected in about six weeks, with final contract negotiations under way with winners.

In August it was reported the massive Chinese firm Shanghai Electric had risen as one favourite to win a grant. A state government summary obtained by Fairfax Media said Shanghai Electric - which has a company value of $1.5 billion - was proposing to build a $250 million demonstration plant in the Valley using technology that improves brown coal's quality and makes briquettes.

The same summary said it was ''expected'' the project would be partially funded via the grant scheme - named the Advanced Lignite Demonstration Program.

In a report on a trade mission to China in October, Premier Denis Napthine said he had met with the chief executive of Shanghai Electric to ''discuss possible future investment opportunities in Victoria's energy sector''.

Other companies that at the time were believed to be favoured for grants included Ignite Energy Resources and Coal Energy Australia. Representatives of Shanghai Electric and Ignite would not comment on Monday.

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