High Purity Alumina (HPA) Project

Altech Chemicals Limited (Altech/the Company) is aiming to become one of the world’s leading suppliers of 99.99% (4N) high purity alumina (AI2O3) through the construction and operation of a proposed 4,500tpa high purity alumina (HPA) processing plant at Johor, Malaysia. Feedstock for the plant will be sourced from the Company’s 100%-owned kaolin deposit at Meckering, Western Australia.

HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire.

Synthetic sapphire is used in the manufacture of high-tech applications such as:

  • substrates for LED lights
  • semiconductor wafers used in the electronics industry
  • scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components

There is no substitute for HPA in the manufacture of synthetic sapphire.

For 2016 the global HPA market was estimated at 25,315tpa and annual HPA demand is expected to increase to 86,821tpa by 2024.

Demand is currently rising at a forecast compound annual growth rate (CAGR) of 16.7% (2016-2024).

 

Final Investment Decision Study (FIDS)

The positive completion of the Final Investment Decision Study (FIDS) is a major step in achieving construction and operation. The FIDS incorporates up-to-date project assumptions including the final capital cost estimate for the construction of the Company’s Malaysian HPA plan and Meckering kaolin mine and container loading facility.

Altech has completed a positive extensive lender due diligence process which means the Project has been significantly de-risked as a result. A fixed-price lump-sum engineering, procurement and construction (EPC) contract with SMS group includes completion guarantee, throughput and process/quality guarantees.

 

FIDS financial metrics

  • Pre-tax NPV7.5 US$ 505 million
  • Internal Rate of Return (IRR) 22%
  • Payback (full rate) 3.9 years
  • EBITDA US$ 76 million p.a.
  • Capital cost US$ 298 million
  • Total target debt of US$ 185 million
  • Production costs – US$ 9.90/kg
  • Avg. sale price – US$26.9/kg
  • Gross Margin – 63%

Project Finance debt funding with German government-owned KfW IPEX-Bank

  • Target total debt of US$ 185 million
  • US$ 165 million export credit finance
  • 50% of plant – German suppliers 
  • Low interest, long tenure
  • ECA approval date 14 Dec 2017

Based on the FIDS results, the Altech Board has decided that the Project proceed to the next stage, the ECA application process. Assuming that the ECA debt component is approved in December 2017, the Company will focus on finalising the equity component of funding in the first half of 2018.