Altech Chemicals has secured another key piece of the puzzle to realise its ambition of becoming a global heavyweight in high purity alumina with approval granted from the Malaysian government for its proposed plant in Johor. Malaysia has jumped at the chance to secure a total investment of $390 million and become a key player in a high-value and rapidly growing commodity.
Altech Chemicals has passed another milestone on its way to becoming the world’s largest producer of high purity alumina, or “HPA” — an essential material in the manufacturing of LED lights, lithium ion batteries, smart phones and a host of other applications
The company announced this week it has secured a manufacturing licence in Malaysia for its proposed HPA plant.
The ASX-listed aspiring HPA producer announced that the Malaysian Investment Development Authority had advised company management that a licence for the proposed 4,500 tonne per annum HPA plant at Johor had been approved, within just weeks of its application being submitted.
The plant is the centrepiece of Altech’s plans to become the world’s largest producer of HPA, based on kaolin material sourced from the exceptionally pure Meckering deposit east of Perth.
Demand for HPA is project to rise strongly as the world switches to electric vehicles and looks to conserve energy.
The high purity of the Meckering deposit allows Altech a low-cost, alternative route to producing HPA, which traditionally involves dissolving aluminium metal via a lengthy and expensive process.
Altech’s kaolin is so pure that the company says it will not have to manufacture aluminium to make its HPA. It will simply upgrade its kaolin directly to HPA, avoiding the significant traditional cost of making aluminium metal first.
The licence approval follows breakthrough news earlier this month that Altech had secured a low-cost US$170 million loan guaranteed by the German Government under that country’s export credit scheme. Germany will be the source of most of the equipment for the plant, which will be constructed by a German EPC giant, SMS Group.
Altech managing director, Iggy Tan, said: “The company is delighted with the support that it is receiving for its HPA project from the Malaysian Investment Development Authority and the Johor and Malaysian governments. The prompt assessment of our manufacturing licence application is testament to the support for our proposed HPA plant, which will represent a total investment of approximately 1.2 billion ringgit (A$390 million).”
It is expected the manufacturing licence will be issued in the June quarter, which will clear the way for Altech to apply to have the project classified “Pioneer Status” (High Technology). If the Malaysian government grants this status, Altech will benefit from 100% income tax exemption for the first five years of production.
Altech stands head and shoulders above many other wanna be exotic metals producers for two key reasons in particular. Firstly, the purity of its kaolin product out of Meckering is off the scale and if grade is King then Altech are royalty in this little known but lucrative market place.
Secondly the stopper for many aspiring projects is debt. It is either a pipe dream or comes with so much risk built into the interest rate that it kills off the project.
Altech has exquisitely accessed the German Government debt guarantee program and already has USD$170m in Government guaranteed debt in the bag.
Altech hasn’t announced its interest rate, however with the German Government prepared to pick up the bill if Altech defaults, it’s a fair bet that it would make most home buyers green with envy.