Altech Chemicals has received an official manufacturing licence from the Malaysian Government for the company’s 4,500 tonne per annum capacity high purity alumina plant in Johor, at the southern tip of mainland Malaysia.
The announcement comes on the back of last week’s news that Altech has secured a suitable site of 4 hectares for the plant in Malaysia’s Tanjung Langsat Industrial complex in Johor.
The company laid down A$5.1m to secure a 30-year lease at the site, with an option to renew for another 30 years.
The industrial complex, located just kilometres from Singapore across the water, has been set aside for chemical processing activities and is part of a global hub for the manufacturing of semi-conductors and specialised synthetic sapphire products, particularly for energy efficient LED lighting.
Altech will source high purity kaolin product from its massive deposit near Meckering, east of Perth.
The product will then be transported to Malaysia for processing into a low contaminant alumina stream for industrial uses.
The demand for “HPA” is experiencing rapid growth and expected to more than double to nearly 76,000 tpa in the next 5 years, according to Altech.
The company is targeting a high-quality alumina product that is currently fetching USD$27,000 per tonne.
Altech has chosen Malaysia due to its proximity to the lucrative HPA markets in Singapore and China.
It also sites the low cost of consumable chemicals and availability of cheap power in Malaysia as prime movers for its decision to locate the plant in Malaysia.
Despite an expected CAPEX of nearly USD$300m, Altech says its studies show a payback on the project of just under 4 years, based on a long-term sale price of USD$26,900 per tonne.
The project shows a projected pre-tax NPV of USD$505m, an IRR of 22% and it will churn out an EBITDA of about USD$76m a year according to the company.
It looks to have plenty of upside too, with HPA recently selling for USD$40,000 a tonne in Japan. At these numbers the feasibility study metrics change substantially to a 2.2 year payback, a massive pre-tax NPV of USD$1.1b and an IRR of 33%.
The annual EBITDA would jump to USD$133m per annum at USD$40,000 a tonne for HPA.
Altech’s project is essentially an exercise in technology.
The company will effectively turn old weathered granite rock in a marginal wheat-producing area of W.A. into high value tech products that will be used in some of the most sought after tech products in the world today. These include LED lights and even high tech mobile telephones to name just two.
With enough raw material in-ground at Meckering to see out 250 years of production, Altech has a significant opportunity to become a trail blazer and market leader in the rapidly growing global HPA market.
By Matt Birney
