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Altech Chemicals executes stage I construction agreement for Malaysian HPA plant

EPC contractor SMS Group, of Germany, will undertake the work which is valued at about $10 million.
Altech's planned HPA plant
The plant will be built at the Tanjung Langsat Industrial Complex in Johor

Altech Chemicals Ltd (ASX:ATC) (FRA:A3Y) has executed an agreement to construct stage I of its high purity alumina (HPA) plant in Johor, Malaysia.

The construction works agreement is with Altech’s appointed engineering, procurement and construction (EPC) contractor SMS Group GmbH (SMS) of Germany.

Work covered under the agreement is valued at around $10 million and includes bulk earthworks, extensive foundation piling and the construction of retaining walls.

READ: Altech Chemicals raising $20 million to begin constructing Malaysian HPA plant

Also included are the underground stormwater/process discharge tanks as well as construction of the site electrical sub-station structure and a maintenance workshop.

The workshop will be used as construction site offices during stage II of the HPA plant construction process.

Plant to be fed by kaolin deposit

Altech has completed a Final Investment Decision Study for the construction and operation of the 4,500 tonnes per annum plant at the Tanjung Langsat Industrial Complex, Johor.

The plant will produce HPA directly from kaolin clay, which will be sourced from the Altech’s kaolin deposit at Meckering in Western Australia.

 

Most of the stage I site works are credited against the US$280 million lump-sum, fixed-price EPC contract awarded to SMS.

Engineering work incorporated in stage I include finalisation of layout drawings and the construction permitting process from local authorities.

Stage I to be equity funded

Altech has decided to equity fund stage I construction in Malaysia to maintain project momentum and the works will be conducted in parallel with project finance close.

The company is in the process of securing project financing.

HPA used in synthetic sapphire

HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire and there is no substitute for its use.

HPA is a key ingredient in synthetic sapphire, which is used to make LED lights.

Synthetic sapphire is used to manufacture substrates for LED lights, semiconductor wafers for electronics, and scratch-resistant sapphire glass used for wristwatches, optical windows and smartphones.

Growing global demand

Global HPA demand was 25,315 tonnes in 2016 and demand is growing at a compound annual growth rate of 16.7%, primarily driven by the growth in worldwide adoption of LEDs.

Altech’s production process will employ conventional off-the-shelf plant and equipment to extract HPA using a hydrochloric acid-based process.

Production costs are anticipated to be considerably lower than established HPA producers.

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