Right on the heels of its high purity alumina plant construction activities hotting up in Malaysia, Perth’s Altech Chemicals has received an invitation from the Saxony State Government in eastern Germany, to consider building a second HPA plant.
The company said that while it remains entirely focussed on the close of funding and construction of its Malaysian HPA processing facility, it also recognises the forecast deficit in the product’s supply beginning next year and therefore the opportunity presented in Germany for a potential second plant.
Business thinktank, CRU Consulting’s most recent report on the market outlook for HPA, outlined a significant predicted shortfall in its supply by about 20,000 tonnes per annum in 2021 and 50,000 tonnes per annum by 2028.
Altech’s Malaysian plant will pump out 4,500 tonnes per annum of HPA when fully operational, so the potential upside to constructing further HPA plants over the coming years, at face value at least, appears to be something of an opportunity.
The invitation to Altech from Mr Michael Kretschmer, who is the Minister-President of Saxony State, outlined the industrial area of Schwarze Pumpe, located 100km north-east of Dresden in eastern Germany as a potential region for a second HPA plant.
HPA is recognised as a critical component in the lithium-ion battery materials supply chain and an Altech processing plant located in Saxony, could be well-positioned to support Germany’s and by extension, Europe’s push, to create and then sustain a significant electric vehicle battery industry.
The automobile manufacturing industry in Saxony is one of the leading automotive hubs in the country, with Volkswagen, BMW, Porsche and Daimler all located there.
In addition to being a strategic site, Altech also indicated that various Government grants might be available if it were to set up shop in Germany.
The company is now undertaking further evaluation of the proposal and considering strong signals from the EU on its desire to accelerate its transition to EVs on the continent.
Altech said its current thinking is vectoring towards Europe for the next HPA plant site construction.
In July, the company said that it could sell up to 49% of its HPA project for USD$100 million to Frankfurt Stock Exchange-listed company, Youbisheng Green Paper AG, following strong expressions of interest from European investors.
Under that proposal, Altech has now acquired a 29% interest in Youbisheng.
Youbisheng will be renamed Altech Advanced Materials and will seek to raise up to €70 million in new equity via a raising, with a prospectus outlining that proposal due shortly.
Management said the proposed deal was developed after it received an unsolicited approach and consulted with German advisors and potential investors.
This deal effectively taps into the growing desire for battery metals exposure from European investors and is likely to be less dilutionary than a capital raising for Altech, with its current share price of about 13.5 cents and market cap sitting close to $100m.
It also highlights the ongoing German interest in Altech.
In April, German investors, Deutsche Balaton and Delphi, provided substantial support for the company’s $18m share placement.
Altech is also continuing to work with Macquarie Bank towards finalising a USD$90m project mezzanine debt facility.
The company continues to progress the Stage 1 construction of its HPA plant in Malaysia, which is nearing completion and it also said that Stage 2 engineering activities have commenced on-site.
The plant in the Tanjung Industrial complex in Johor will produce the 4,500 tonnes per annum of HPA from very pure kaolin clays sourced from a shallow open-pit mining operation near Meckering in WA.
Altech’s Meckering deposit has a current JORC resource of 12.7 million tonnes grading 29.5% alumina, which is sufficient to support a staggering mine life of up to 250 years at the expected throughput rate.
This includes a measured and indicated resources of 4.8 million tonnes grading 30% alumina and importantly, the deposit has less than 1% of penalty impurities such as iron, potassium and sodium.
HPA is utilised in high tech applications such as LED lighting, advanced mobile phones and as a separator in lithium-ion batteries.
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