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Fuel cell developer Acta (ACTA:AIM) could announce its first waste treatment customer within the next few months. It has developed a catalyst that can decompose ammonia to a level safe for disposal. Petrochemical and polymer manufacturers are likely to be customers.

Chief operating officer Toby Woolrych said Acta was in ‘reasonably advanced’ talks and should secure a contract within the first half of 2008, potentially coinciding with the group’s full-year financial results in March.

‘Around 85% of ammonia is used in the agricultural sector as a fertiliser. The remainder is used by industrial companies where the chemical can become harmful waste which must be dealt with,’ said Woolrych. ‘For example, a company may only have very diluted amounts of ammonia in their waste stream of around 0.25%, but this is still too dangerous to go into the water system. Our catalyst can break the ammonia down further to safe levels.’

Securing a waste treatment customer would transform the last of its three operating divisions into a commercial business.

Its first contract was awarded last November for developing its catalyst to turn ammonia and ethanol into hydrogen for powering cars. The deal with sales partner Sumitomo and an equipment manufacturer – thought to be one of Asia’s biggest car makers – to develop the fuel system will be worth ?0.6 million for the first four months’ work.

Last week, Acta sold its first disposable fuel cell prototype to an Asian manufacturer, helping to lift its share price by 6% to 51p. The product is an alternative to alkaline and lead acid batteries used in items such as torches and toys.

The company claimed the contract, although ‘relatively small’ in value, featured the world’s first platinum-free product with two and four cell units. ‘Liquid fuel cells tend to only provide 0.4 volts power, but most electronic devices need 1.5 volts. The multiple cell units can provide the extra power without the need for step-up units,’ said Woolrych.

Acta claimed the disposable fuel cells offer up to five times the durability of traditional batteries and can be disposed of in a more environmentally friendly way. It said the catalysts cost ‘pennies’ to make, but refused to detail exact production costs.

Additional income from its waste treatment division is being sought from biofuel companies including the use of catalysts to turn glycerol into fuel.

It is also nine months into a two-year project with the Carbon Trust to find a way of converting waste carbon dioxide into usable fuels. ‘The biofuel process produces as much carbon dioxide as ethanol,’ explained Woolrych. ‘If we can treat this waste and continue the fuel conversion process, this would be a very important step forward in the clean technology industry.’

Shares says: The company is not forecast to become profitable until 2010. Contract momentum should mend the poor share price which has fallen over 55% since July.