High Purity Alumina (HPA) Project

 

 

 

1. High Purity Alumina (HPA) Project
2. Meckering Kaolin Deposit
3. Altech's Processing Technology
4. HPA Market Demand
5. Summary

 

High Purity Alumina (HPA) Project

Altech Chemicals Limited (Altech/the Company) is aiming to become one of the world's leading suppliers of high purity alumina (HPA) (Al2O3). 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 substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical lenses and smartphone components. There is no substitute for HPA in the manufacture of synthetic sapphire.
 
Global HPA demand is approximately 25,315tpa (2016) and demand is expected to grow at a compound annual growth rate (CAGR) of 16.7% (2016-2024), primarily driven by the growth in worldwide adoption of LEDs. As an energy efficient, longer lasting and lower operating cost form of lighting, LED lighting is replacing the traditional incandescent bulbs. 
 
Current HPA producers use an expensive and highly processed feedstock material such as aluminium metal to produce HPA.
 
Altech has completed a Bankable Feasibility Study (BFS) for the construction and operation of a 4,000tpa HPA plant at the Tanjung Langsat Industrial Complex, Johor, Malaysia. The plant will produce HPA directly from alumina-rich kaolin clay, which will be sourced from the Company's 100%-owned kaolin deposit at Meckering, Western Australia.
 
Altech's production process will employ conventional “off-the-shelf” plant and equipment to extract HPA using a hydrochloric (HCl) acid-based process. Production costs are anticipated to be considerably lower than established HPA producers. 
  1. Pre-tax NPV US$3589
  2. Payback 3.7 years
  3. IRR 33.3%
  4. Capex US$78.7m
  5. Opex US$9,070/t 
  6. HPA sale price US$23,000/t
  7. Margin US$13,930/t
  8. EBITDA US$55.7m/year
The sales price assumption for HPA is US$23.00 per kg (US$23,000 per tonne), foreign exchange rate assumptions USD:AUD 0.70 for capex and USD:AUD 0.80 for opex. The discount rate applied to project cash flows for the 30-year project life is 9% reflecting a lower cost of debt financing because of the Company’s intended application for ~US$60m of German export credit finance, from total project debt currently estimated at ~US$70m.

Altech is focused on becoming a leading supplier of HPA to meet the growing global demand for LEDs, lithium-ion battery separators, and smartphone components. 

 

Meckering Kaolin Deposit

The majority of HPA producers use an expensive and highly processed feedstock material, such as aluminum metal, to produce HPA.  One of the main advantages of the Company’s strategy is that its alumina-rich kaolin material with naturally low impurities provides a cheaper feedstock alternative to producing HPA.

Altech has researched and developed a process to extract HPA from its 100%-owned kaolin deposit in Meckering, Western Australia, located approximately 130km from Perth. Altech's kaolin material is extremely low in impurities and is an ideal feed for the Company’s HPA processing plant. Altech produces 4N HPA directly from its Meckering kaolin ore; this high-quality feedstock facilitates the production of a very pure, world-class HPA product. 

 

Altech's Processing Technology

Altech employs a conventional and proven HCl-based technology that is highly suited to producing high quality HPA from kaolin clay. Altech's production process will use off-the-shelf plant equipment to extract HPA, which offers significant production cost benefits.

 

HPA Market Demand

Global HPA demand is approximately 25,315tpa (2016) and demand is expected to grow at a compound annual growth rate (CAGR) of 16.7% (2016-2024), primarily driven by the growth in worldwide adoption of LEDs. As an energy efficient, longer lasting and lower operating cost form of lighting, LED lighting is replacing the traditional incandescent bulbs. 

  • HPA is experiencing increasing demand due to its growing significance in the production of today’s high-performance electronic devices;
  • HPA’s superior qualities are pertinent features for a range of existing and new applications, for example sapphire glass for smartphones;
  • The price for the 4N HPA product is a high-value product which ranges from US$20-$40kg depending on purity and quality.

Today HPA demand is experiencing exponential growth due to the ongoing development of superior high-tech products such as LEDs, lithium-ion batteries and smartphone products. Altech is poised to take advantage of this growth market and believes it is in the right place at the right time.

 

Summary

  • The process outlined utilises well-established, proven and low-risk technology and equipment that has been around for many years;
  • The cost of production is expected to be highly competitive on a global scale due to the relative simplicity of the process;
  • The return of investment is expected to be significant due to the high-value nature of the product and rapid growth driven by the electronics sector