Altech locks down ownership of Meckering kaolin deposit
Altech Chemicals have strengthened their hold on their high-grade Meckering kaolin deposit near Perth by exercising their option to purchase 94 hectares of freehold land on which the deposit is located.
The Meckering deposit is at the heart of the company’s advanced plans to become the world’s largest supplier of high purity alumina or “HPA” , which is needed to make synthetic sapphire wafers found in LEDs, semiconductors, watches and consumer electronics. HPA is also an essential element in Lithium Ion batteries and is used to separates cathode and anode sheets.
Global demand for HPA is forecast to soar from 25,315 tonnes in 2016 to 86,831 tonnes in 2024. That’s a compound annual growth rate of 17%.
HPA is expensive too, selling for around US$24,000 a tonne. The high price reflects the fact that production typically begins with aluminium metal, which is dissolved in sodium hydroxide and is followed by a series of processes to remove impurities.
However Altech Chemicals has a huge advantage over other HPA producers because of the incredibly high purity of the Meckering deposit, just 135 kms east of Perth.
The purity levels will allow Altech to direct ship its Meckering kaolin to an HPA plant that it is planning to build in Malaysia. The BFS for the project published last year revealed an operating cost of just US$9,070 per tonne, which compares to competitors costs of between US$14,000 to $US17,000 per tonne.
The BFS was based on a capital cost estimate of US$78.7 million and HPA production of 4,000 tonnes per annum, which would catapult Altech past Sumitomo Chemicals to become the world’s largest producer. Mitsubishi has already signed an offtake agreement for all production for the next 10 years.
Altech Managing Director, Iggy Tan, said: “The exercise of Altech’s option to purchase land over the mining lease is another important milestone in advancing our HPA project. Meckering is now fully permitted for construction. Development of the kaolin screening and loading facility then initial mining can proceed upon finalising of project finance.”
The other fascinating part of the Altech story is the potential for a German government guarantee of debt funding for the project, which could slash financing costs and further improve returns for investors.
Most of the technology and equipment that goes into HPA plants was developed in Germany. The state supports local manufacturers by offering a debt guarantee scheme for projects that will involve significant exports of German engineering. Altech fits right into this category and has been making solid progress with its EPC contractor, the Dusseldorf-based SMS Group, on securing the Government debt guarantee. A decision is expected on 14 December.
Investors are also keenly anticipating a revised BFS that will reflect an increase in size of the proposed plant to 4,500 tonnes per annum from 4,000 tpa in the original study. The upsizing and a number of other improvements have been built into the proposal as part of a review process of the government debt guarantee.
Altech Chemicals (ATC)
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