Altech locks down Malaysian HPA project site

Aspiring high purity alumina company Altech Chemicals has locked in another key part of its plan to become one of the world’s largest producers of high purity alumina, or “HPA” with a $5.1 million payment to secure a Malaysian site for its processing plant.

In an update to the ASX, Altech reported payment of the final instalments totalling $5.1 million for 4 hectares of industrial land in Malaysia’s Tanjung Langsat Industrial Complex in the southern state of Johor.

The payment secures a 30-year lease on the site, with an option to renew for another 30 years.

The complex, located just kms from Singapore, has been set aside for chemical processing activities and is part of a global hub for manufacturers of semiconductors and synthetic sapphire products.

These industries are the major buyers of HPA, which is a high-value product experiencing rapid growth in demand.

Johor offered Altech a number of tax incentives to process its high-purity kaolin from Meckering, east of Perth, in Malaysia. This includes a five-year corporate tax discount.

The biggest benefits of operating in Malaysia however, are the ready availability and low cost of the consumables needed to produce HPA, including hydrochloric acid, limestone, quicklime, power and natural gas.

Altech is nearing the finish line on a final go-ahead for the project, which has already secured a US$190 million senior debt package from Germany bank KfW IPEX bank, of which US$170 million is guaranteed by the German Government because Altech agreed to use a German firm to design and build the plant.

This left Altech to secure the balance of US$108 million in capex costs for the construction of the HPA plant.

Earlier this month, the company said it was making good progress in locking down the final funding, having received an indicative mezzanine debt term sheet for US$120 million from a global investment firm with similar term sheets also expected before months end.