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Altech Chemicals Limited - Oct 2018
Altech Chemicals (ASX:ASX) is aiming to become one of the world’s leading suppliers of 99.99% (4N) high purity alumina (HPA). HPA is a high value product (US$40,000/t indicative market price in Japan) and forms the base for producing synthetic sapphire. Synthetic sapphire is used in the manufacture of substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components. A new, potentially massive market for HPA (in powder form) is as a coating on Li-ion battery separators to improve battery thermal stability. We calculate HPA demand increasing at a 17% CAGR between 2018E and 2025E, requiring the equivalent of 15.4x proposed ATC plants over the next seven years.
A Final Investment Decision Study (FIDS) for ATC’s HPA Project was published in October 2017. The positive FIDS reported a mine life of 30 years (Meckering kaolin deposit, Western Australia), process plant (Johor state, southern Malaysia) capacity of 4,500tpa HPA, production costs of US$9.90/kg HPA and a pre-tax NPV7.5 of US$505m.
ATC’s Project development plans are significantly advanced. Stage 1 construction (site clearance, piling) at the plant site in Malaysia commenced in August 2018. US$190m (64% of pre-production capex) has been secured with German bank KfW IPEX-Bank, while ATC has secured a fixed price EPC contract with leading German engineering group SMS group, and a 10-year 100% offtake agreement with leading Japanese commodity trading and investment company Mitsubishi.