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Altech Chemicals Ltd

Altech Chemicals' high-purity alumina attractive to Asian battery markets

The company attended Battery Osaka in Japan, a conference which outlined shortages in medium-term high-purity alumina supply as well as the growing use of HPA in lithium-ion batteries.

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Altech's stall at Battery Osaka 2018

Altech Chemicals Ltd (ASX:ATC) has identified an emerging opportunity in the Asian lithium-ion battery sector for its high-purity alumina (HPA) produced in Malaysia from Western Australian kaolin.

The company attended Battery Osaka, a three-day international rechargeable battery exhibition, which attracts representatives from major lithium-ion battery manufacturers and materials suppliers in Japan, South Korea and China.

Discussions Altech had at the conference made it apparent that HPA was now increasingly being directly applied as an outer coating layer onto anode and cathode materials used in lithium-ion batteries, as well as being used as a coating on polymer separator sheets.

Altech considers this development to likely represent an additional market opportunity and demand driver for its 99.99% (4N) HPA.

READ: Altech Chemicals advancing plant construction in Malaysia

HPA-coated lithium-ion battery separator sheets greatly increase the integrity of the separator.

This allows a lithium-ion battery to operate at higher temperatures, enhances heat dissipation and assists to prevent thermal run-aways, increasing overall battery safety.

The purity of the alumina, as well as product consistency, is critical in its use in batteries.

Lower-purity HPA in lithium-ion battery coating applications can lead to a higher possibility of battery failure and degradation, reduced cycling behaviour and reduced conductivity.

Research suggests that the migration of lithium-ion battery manufacturers to HPA-coated battery separators as a replacement for traditional non-coated plastic polymer separators is occurring faster than expected.

This view is based on new research and demand forecasts by London-based CRU Consulting and Sydney-based Petra Capital Pty Ltd, plus previous research by Persistence Market Research and Altech.

HPA in lithium-ion batteries

 

READ: Altech Chemicals resumes normal trading, due diligence process commences

Altech managing director Iggy Tan said: “A key take-away from the Battery Osaka exhibition is that the HPA market appears to be evolving in line with forecasts from groups such as CRU and Persistence Market Research, and if anything, perhaps a little stronger than forecast.

“This is positive for Altech.

“HPA is a speciality high-quality material which attracts premium pricing because it is critical to the manufacture of high-quality lithium-ion batteries – such as are used in electric vehicles.”

“The cost of HPA in a lithium-ion battery for an electric vehicle is insignificant, but a compromise in HPA quality may result in catastrophic consequence such as a thermal runaway.”

Altech offers potential supply diversity solution

Potential end-users of Altech’s HPA at the exhibition believed its proposed product specifications were highly-suited to their applications.

An attendee representing the lithium-ion battery industry in South Korea directly raised with Altech the industry’s concern about future HPA supply given current usage and demand trends.

The attendee specifically identified the lack of diversity of HPA supply into the South Korean market which is dominated by Japanese manufacturer Sumitomo and its South Korean subsidiary.

It was suggested that a new high-quality HPA producer such as Altech would be a much needed addition to HPA supply diversity for the South Korean and Japanese markets.

Altech plans to advance discussions with Mitsubishi and several lithium-ion battery manufacturers in the near-future as part of ongoing marketing efforts.

Battery Osaka 2018

 

READ: Altech Chemicals breaks ground in Malaysia as Stage I high purity alumina plant work begins

Tan said that Altech intended to operate at the premium end of the HPA market and did not see low-quality HPA producers as competitors.

He said: “Our main target market has always been Japan, South Korea and Taiwan.

“It is apparent that HPA pricing continues to be strong and consistent in these markets.”

Several Japanese and South Korean buyers at the exhibition confirmed the prevailing market price for the highest consistency and quality 4N (99.99%) HPA, typically from Japan, is around US$40,000 per tonne.

This level of pricing was also confirmed by the Mitsubishi representative at the exhibition.

Altech has used a price of US$27,000 per tonne in its definitive feasibility study’s financial model which, with a US$40,000 a tonne price tag, would deliver an internal rate of return of around 33% and generate EBITDA of around US$133 million per annum at nameplate production.

READ: Altech Chemicals’ shareholders dig deep to raise $4.3 million in support of high purity alumina strategy

Altech aims to become one of the world's leading suppliers of 99.99% (4N) HPA.

Its 4,500 tonnes per annum plant forms an important part of an integrated HPA strategy which incorporates kaolin clay sourced from the company’s kaolin deposit at Meckering, Western Australia.

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

Altech began construction of its HPA plant in Johor, Malaysia, last month.

Proposed HPA plant in Johor, Malaysia

Quick facts: Altech Chemicals Ltd

Price: $0.10

Market: ASX
Market Cap: $74.31 m
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Altech Chemicals deploying 'disruptive technology' that slashes HPA...

Altech Chemicals Ltd (ASX:ATC) (FRA:A3Y) managing director Iggy Tan updates Proactive Investors on the company's project development, and educates on High Purity Alumina (HPA) applications and markets. Currently worth about US$40,000 per tonne, HPA is in high demand as it is a critical...

on 28/6/18

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