Altech Chemicals on development path for High Purity Alumina project

Altech Chemicals (ASX:ATC) is currently in the process of permitting, securing off-take interest and project financing for its High Purity Alumina (HPA) project.

This is targeted towards breaking ground for project construction in the first quarter of 2016.

In June, the company completed three months ahead of schedule a Bankable Feasibility Study that highlighted the potential of its HPA project to deliver high margins, strong cash flows, and rapid payback period.

Key metrics from the BFS included:

- Capital cost estimate US$76.9 million (A$98.6million);
- Payback period 3.8 years;
- Estimated pre-tax NPV of US$326.1 million (A$362.4 million) (at 10% discount);
- IRR of 30.3%;
- Long-term sale price forecast of US$23,000/tonne (A$25,560/tonne) for 99.99% (4N) product; - Cost of goods sold US$8,140/tonne (A$9,050/tonne); and
- EBITDA of US$59.4 million (A$66.0 million) per annum.

The company has already commenced permitting for its proposed aluminous clay (kaolin) mining operation and beneficiation plant at Meckering, Western Australia.

This is a key component and input to Altech's High Purity Alumina (HPA) project that provides a real alternative to current Chinese and Japanese producers.

Processing Plant

The second part of the project is the proposed Malaysian HPA plant.

This is a single train continuous processing plant, which will provide economies of scale in terms of operating costs and will position Altech as the largest producer of HPA in the world, surpassing Sumitomo Chemicals that currently states its annual HPA production capacity at 3,200 tonnes.

In optimising the design of its HPA plant, the company has specifically focused on minimising technological risk by selecting proven “off-the-shelf” plant and equipment.

Its location at Tanjung Langsat was chosen based on significant economic and developmental benefits associated with this dedicated industrial park, which includes the ready availability of hydrochloric acid, power and natural gas – all at highly competitive prices, and for its proximity to international container ports and international airports (Johor Bahru and Singapore).

The plant will apply a hydrochloric acid (HCl) leach process to produce HPA directly from kaolin clay sourced from Meckering.

HPA Market

The global HPA market was estimated at 19,040 tonnes per annum in 2014 and is expected to increase to 48,230tpa by 2018 growing at a compound annual growth rate of 28%.

The global HPA market is rapidly growing in the artificial sapphire sector, which is used to produce Light Emitting Diode (LED) products (55%), semiconductors (22%), phosphor plasma display panels (16%) and industrial/chemical/medical applications (7%).

- HPA is experiencing increasing demand due to its growing significance in the production of today’s high-performance electronic devices;
- HPA is the key ingredient to the modern world;
- HPA’s superior qualities are pertinent features for a range of existing and new applications, for example sapphire glass for smartphones; and
- The price for the 4N HPA product is a high-value product which ranges from US$20-$50/kg.

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