Altech Chemicals Limited - High Purity Alumina Producer

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. Initial construction works for the Malaysian HPA plant commenced in August 2018 with clearance of the Company’s plant site. Altech released a Final Investment Decision Study (FIDS) for the HPA project, detailing a 4.5ktpa HPA operation over a 30 year life with a capex of US$298m and an average operating cost of US$9.9/kg.

 

HPA project development

  • FIDS completed with robust project economics:

    • 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 debt of US$ 190 million

    • Production costs – US$ 9.90/kg

    • Avg. sale price – US$26.9/kg

    • Gross Margin – 63%

  • Market for HPA growing at a CAGR of 15-20% per annum out to 2025 primarily driven by LED/synthetic sapphire demand

  • Exclusive 10-year offtake agreement in place with Mitsubishi

  • US$340m project finance agreed or under negotiation with KfW IPEX-Bank and other international financiers

    • US$190m senior loan agreed, of which US$170m is low interest, long tenure Export Credit Agency (ECA) cover

    • Term sheets in place for US$90m mezzanine loan and US$60m stream finance

  • Fixed price EPC with SMS group, offering a significantly de-risked construction pathway guaranteeing throughput volumes/quality and taking on commissioning responsibility

  • Fully permitted project with commencement of HPA plant construction stage 1 works from July 2018

High purity alumina

HPA is a high-value (USD28,000 – USD40,000 per tonne), high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire and is increasingly consumed in the manufacture of large format lithium-ion batteries.

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.

Lithium-ion battery manufacturers require HPA as a coating for the plastic anode/cathode separator to reduce separator shrinkage and combustibility.

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).

 

 

Related Documents: 
PDF icon CICERO Green Bond Report (Second Opinion)
PDF icon Altech Green Bond Framework