Emerging producer of high purity alumina (HPA) Altech Chemicals (ASX: ATC) is progressing well in the construction of its processing plant in Malaysia towards becoming a leading global supplier of 99.99% HPA (grade 4N) for the lithium-ion battery industry.
By the end of the September quarter, the Australian company had completed the first construction work on the second stage of its planned 4,500 tonnes per year plant in Johor state in southern Malaysia.
Altech CEO Iggy Tan said Lowercase that the company is working hard to complete funding for its vertically integrated project, which will process raw materials shipped from its 100% -owned kaolin mine in Meckering, Western Australia.
Earlier in November, Altech announced a right offer to raise $ 14.5 million with part of the funds to be used to pay for the construction of the second stage, as well as for other HPA initiatives.
Total funding of US $ 413 million (AU $ 562 million) is estimated for the project, with the construction of the plant alone amounting to US $ 280 million (AU $ 381 million).
The company has already secured US $ 190 million (AU $ 259 million) under a senior project finance facility with KfW IPEX-Bank, owned by the German government. And it recently launched a listed “green bond” financing option that would secure up to an additional US $ 100 million as an alternative to mezzanine bank debt.
Construction of the HPA plant
Over the past two years, Altech has raised approximately $ 39 million to maintain project momentum and begin construction on Phases 1 and 2 at its 4,500 tpa HPA plant site in Malaysia.
The first stage of construction began in February 2019 and the second stage was completed in July (after the lifting of temporary restrictions due to the start of the COVID-19 pandemic).
Mr Tan said the strategy of starting construction before the project funding closes was an opportunity to “test and demonstrate the low level of construction risk for the location”.
“Although the Tanjung Langsat Industrial Complex is a mature industrial park and Altech has always had confidence in a similar construction start to what could be experienced in Australia, there were benefits for all stakeholders to demonstrate. “, did he declare.
“Risks included ease of obtaining building permits, site access, environmental approvals, regulatory permits, demonstration of soil conditions, and the availability of knowledgeable subcontractors who would work safely and in accordance with regulations. international standards. “
Engineering, procurement and construction (EPC) contractor for Altech, a subsidiary of German group SMS, was demobilized from the site in early July, but Mr Tan said the site was well placed for the restart rapid construction activities once funding for the additional project is secured.
Conservative modeling of the HPA project cash flows demonstrated a pre-tax net present value of US $ 505.6 million (AU $ 688.5 million) for 30 years of operation and an estimated payback period of 3. 8 years.
HPA Market Outlook
HPA is a high value, high margin and demanded product required in the production of synthetic sapphire for the manufacture of substrates for LED lamps, semiconductor wafers for the electronics industry and scratch resistant sapphire crystal.
HPA is also increasingly used in the manufacture of lithium-ion batteries, where it is applied as a coating on polymer anode / cathode separation sheets used in batteries to reduce separator shrinkage and combustibility of. battery.
According to an independent market study commissioned by Altech, the global demand for 4N (i.e. a purity level of 99.99% or higher) in HPA was around 19,000 tpa in 2018 and is expected to increase to a compound annual growth rate of 30% to approximately 272,000 tpa by 2028, driven primarily by the expanding lithium-ion battery and LED manufacturing sectors.
Mr Tan said demand growth for 4N HPA will also be driven by electric vehicle developments in Europe.
“The manufacturing capacity of lithium-ion battery cells already under construction in Europe is 300 kWh per year by 2025. The demand for HPA as a coating on battery separators from such production annual is estimated at 25,000 tonnes per year, ”he said.
Potential second HPA plant in Germany
In July, Altech’s German subsidiary signed an option to purchase a 10-hectare site in an industrial park in Saxony to assess the viability of building a second HPA plant. The idea was strongly supported by the government of the State of Saxony, which offered the company a grant of € 7,380,000 (AU $ 12 million).
“Altech remains focused on closing the financing of our first HPA plant in Johor, Malaysia, and resuming construction. However, by evaluating this opportunity in Germany, we are quickly responding to Europe’s desire to bring its supply chains closer to home and increase its self-reliance for critical raw materials – such as those used in manufacturing. of lithium-ion batteries, ”Mr. Tan said.
“We see this as a potential opportunity that cannot be ignored, especially given Altech’s established strong ties to Germany – both on our share register, our board of directors and the relationships we have. established with the SMS group and KfW IPEX-Bank, owned by the German government, “he added.
Altech said the funds from its latest fundraiser of $ 14.5 million will be partially applied to the company’s various European initiatives, which also include listed green bonds.
The non-waivable pro-rata entitlement agreement provides eligible shareholders with over 363.3 million shares at $ 0.04 each on a 2: 5 basis, plus a free attach option for every two new shares subscribed.
Silicon powder collaboration
At the same time, Altech announced a new collaboration with leading silicon powder supplier Silico Ferrosolar to develop a high-capacity, long-life active silicon anode material for use in lithium-ion batteries. .
As part of the 12-month partnership, the companies will analyze the possibility of using HPA and Altech’s technology to coat specially designed silicon particles supplied by Silico Ferrosolar. Altech will supply the coating technology and finance the test work on its own.
Citing announcements from the recent Tesla Battery Day, Tan said silicon solutions are expected to “dominate the battery market over the next five to seven years.”
“Silicon has almost 10 times the (theoretical) capacity of carbon-based materials, at around 3,500 mAh / g. Besides its superior electrochemical performance, silicon is also the most abundant material on earth after oxygen, thus eliminating potential problems of scarcity, ”he said.
“Altech is developing an anodic grade HPA and coating technology with the aim of applying the coating to graphite particles typical of those currently used in the anode of the lithium-ion battery. We believe the same technology can be applied to Silico battery silicon powders