Altech Chemicals (ASX:ATC) aiming to become one of world's leading suppliers of high purity alumina


by Rachael Jones

Altech Chemicals Limited (ASX:ATC) Managing Director Iggy Tan provides an update on construction of the company's high purity alumina (HPA) processing plant in Malaysia, its funding plans for the next phase of construction, growing HPA applications and plans for a second HPA plant in Saxony, Germany.

Rachael Jones: Hello, I'm Rachael Jones for the Finance News Network. Joining me from Altech Chemicals is Managing Director, Iggy Tan. Iggy, welcome back to the network.

Iggy Tan: Thank you, Rachael. Thank you for having me.

Rachael Jones: Now first up, Iggy can you remind us about your projects and the aims of the company?

Iggy Tan: Well, as you know Rachael, Altech Chemicals is an Australian company. We're listed on the Australian Stock Exchange as well as the Frankfurt market. And, our vision is to build a-four-and-a-half-thousand- ton per annum high purity alumina plant. High purity alumina is aluminum oxide at 99.99% purity. And it's used in two growing sectors, the LED industry, as well as the lithium battery industry. And if you can imagine LEDs and lithium batteries, you can also imagine the potential demand going forward.

Rachael Jones: Absolutely. Now, let's talk about your flagship HPA plant, starting with plant construction activities.

Iggy Tan: So, our deposit is in Western Australia. We have a kaolin deposit, which is the feedstock for our high purity alumina plant in Malaysia. So, in the last year or so, we've completed the stage one and stage two construction of the Malaysian plant. And, the reason we commenced the construction is essentially to de-risk the project. Like any greenfield site, there is always a risk of getting onto the site with environmental permits, construction permits, and also understanding the ground conditions. So, we managed to raise the money to commence that construction process and we've now completed stage two. Obviously we're waiting for project finance, but what it does to us, it gives us a running start to the project when finance comes through.

Rachael Jones: And, what can you tell me about the Malaysian tax allowance approval?

Iggy Tan: Well, we've recently announced that we have a five to 10 year tax free window by the Malaysian Government. Our project is considered as a high-tech project. And, the Malaysian Government has attracted industries like us to Malaysia. And, we have essentially a 10 year tax free window.

Rachael Jones: And, what can you tell me about the project funding?

Iggy Tan: We've been working very hard on the project finance. As you know, 190 million of the project finance has been secured with a German bank or KfW IPEX-Bank, that's locked away. We're now working on the other components of the debt, which is roughly about a hundred million US dollars. We have been working with Macquarie, but we've now shifted our focus to the listed green bond process.

The project has been accredited as a green project recently by a group out of Norway. Essentially, we use 49% less carbon gases to produce one ton of HPA, so it is considered as a green project. And, we now advancing the listed green bond market to raise approximately 144 million U.S. dollars. As you know, the listed green bond process is essentially a debt instrument, but it can be out to mums and dad investors, smaller funds, rather than one or two major debt providers.

Rachael Jones: And Iggy, can you tell us about your European ambitions?

Iggy Tan: We have decided that the next plant should be in Europe for certain reasons. The first one is that there's a 2020 CO2 emission levels in Europe. It was about 95 grams per kilometre. And, all car manufacturers in Europe, in order to meet that standard, half of their fleets have to be electric vehicles. And so, what they have done is focus, and retool some of their factories towards electric vehicles. And, they also want all their materials for the EV being sourced from Europe. So high purity alumina, I don't know whether you know, but it's used in lithium batteries. It's used in the separators, it's used in the anode and is used in the cathode. So, high purity alumina is essential part of lithium batteries. And, if we are going to supply Europe, we propose that our next plant will be in East Germany. So, whilst we're focused on completing the funding for the Johor project, we also need to start the planning process for the next plant in Europe.

Rachael Jones: And Iggy, you recently announced a new grade of HBA for the lithium batteries. Can you tell us about that?

Iggy Tan: what's been challenging for the lithium battery industry is that, 8% of lithium is lost before the customer even gets the battery. This is called the first cycle, lithium loss. And, 8% of the lithium becomes inactive when it coats the graphite particles.

What our technology is, that we are able to coat the graphite particles with high purity alumina, which stops that lithium loss. Now, if you have 8% of more lithium in the battery, your density of the battery is increased by 8%, or your cost of battery is reduced by 8%, which is a significant benefit. Also, the life of the battery also extends itself. We estimate maybe 20 to 30% increase in a life of the battery.

Rachael Jones: And to the last question now Iggy, is there anything else you would like to add?

Iggy Tan: We recently launched a rights issue for 14 and a half million, of which nearly 55% is already underwritten. Some of the funds will be used for the feasibility study for the European initiatives. Some of the funds will be used for the development of the anode grade high purity alumina. Some of the funds will be used to pay off the stage two of the Johor construction. And finally, some of the funds will be dedicated to the listed green bond process. That green bond process will hopefully be finalized during quarter two of next year.

Rachael Jones: Iggy Tan, thanks for the update and nice to see you again.

Iggy Tan: Thank you for having me Rachael.