ITOCHU invests in local firm UON

Giant Japanese trading house ITOCHU has struck a deal to become a shareholder in privately-owned Malaga firm UON, which is planning to diversify beyond its traditional focus on remote power and water systems for the mining sector.

UON and its existing partner, Macquarie Group, have not announced the investment as it remains subject to regulatory approvals.

However, ITOCHU – which will acquire a large minority stake in UON – quietly announced the deal in Japan last month.

The ITOCHU deal is one of several major developments at UON recently, including chief operating officer Daniel Kennedy's promotion to succeed Greg Heylen as chief executive from the start of this month.

UON has also suffered a legal setback in the Federal Court, with competitor Allied Pumps successful in claiming a key patent held by UON for a pump control system was invalid (see more below).

The Federal Court ruling will make it easier for competitors to chase contracts with big miners such as BHP, Rio Tinto and Roy Hill, which are all major UON customers.

Executive chairman Mark Keogh insisted the court ruling would have a negligible impact on the business, which was pivoting to new technologies and new markets.

The relevant patent was for a system, marketed as the GMC Solution, used to power and control dewatering systems on mine sites.

UON’s original application for a patent was opposed by several competitors, including Malaga-based Taranis Power Group, Canning Vale firm Allied Pumps and Melbourne law firm Anderson IP.

That matter is still live.

The court ruling related to UON’s innovation patent, which Mr Keogh said was due to expire in August 2025.

In addition, he said the old technology had been superseded by the company’s new solar powered energy storage solution, known as the SMART Cell.

The new technology dovetails with ITOCHU’s plan to jointly promote low-carbon off-grid and micro-grid energy solutions.

Sustainable Energy Business Department general manager, Hiroaki Murase, said ITOCHU had been involved in the lithium-ion battery business for more than 25 years.

“Energy storage will play a critical role in maximising renewable energy usage and will further the advancement of various application sectors, such as electrified mobility,” he said.

“Through this partnership with UON, [we are] not only supporting the energy storage supply chain, but we will also promote UON solutions to expand their customer base using our global network.”

The alliance between the two companies also supports UON plan to diversify beyond its traditional focus on remote mining projects.

“The solutions we have created are adaptable to oil and gas, agriculture and also grid support,” Mr Keogh said.

“Our expectation from the investment is that over the next couple of years we will see significant growth.”

Mr Keogh said the SmartCELL technology had multiple applications beyond a battery motor controller.

“If you have it on your mine site, you can be dewatering the mine site and you can plug in your EV while you are doing maintenance,” he said.

“And if you need an air-conditioned office beside it, you just plug that in, and its 100 per cent off-grid.”

UON said an installation at a Northern Star Resources’ mine site had recorded fuel savings in excess of 65 per cent compared to traditional diesel-only generation.

Mr Keogh said UON’s vertically integrated business, which employs 375 people in everything from product development to manufacturing and installation, provided a competitive edge.

“If these solutions are brought in from overseas, they are very difficult to support,” he said.

Meanehile, the Federal Court ruling, handed down late last year by Justice Kylie Downes, upheld Allied’s claim against UON subsidiary LAA Industries and dismissed a counter-claim.

“My primary conclusion is that the patent is invalid for want of novelty,” she stated.

This finding was based in part on UON hiring out two of its GMC pumps to Roy Hill Iron Ore Pty Ltd “before the earliest priority date”.

The technology was also supplied to Lihir Gold Ltd for dewatering in about 2012.

“I have also found that, in any event, there was no infringement as alleged in the cross-claim and the cross-claim should be dismissed,” Justice Downes said.

She said UON’s case rested primarily with employee Anthony Reid, who co-invented the GMC technology with Mr Keogh.

The court was critical of Mr Reid’s performance as a witness.

“He therefore has a vested interest in the outcome of this litigation, and his performance as a witness betrayed his partiality to that cause,”  Justice Downes stated. 

“This is particularly as he appeared to try to give answers to questions which best suited UON’s case, and which would save the patent, rather than giving candid and frank evidence of his genuine recollection.

“Further, Mr Reid was an unreliable witness.”

Justice Downes noted Mr Keogh was not called as a witness.

She also criticised the evidence provided by consulting engineer Duncan Quick, who was one of four expert witnesses.

“I do not accept Mr Quick’s evidence to the extent that it differs from any of the evidence of Mr Baarslag, Mr Vukadin and Mr Bernedo in connection with topics relating to dewatering,” she stated.

“That is because Mr Quick has no direct experience in dewatering.

“The opinions that Mr Quick expressed were often in direct contrast to the three other experts who do have direct experience in dewatering.

“Otherwise, I generally treat the evidence of Mr Quick with significant caution to the extent that it differs from the evidence of the other experts.

“That is because Mr Quick generally appeared intent on assisting UON when answering questions asked of him during the concurrent session (such as by, for example, giving lengthy and unresponsive answers to questions).”