Altech Chemicals Limited (ASX:ATC) (FRA:A3Y) has executed a purchase agreement option for a 10-hectare industrial site in Schwarze Pumpe Industrial Park at Spreetal in the Saxony region of Germany as the company considers constructing a second high purity alumina (HPA) plant.
This also comes after Germany unveiled details of electric vehicle (EV) industry fiscal support incorporated in its economic stimulus package post-COVID-19.
The company received an official invitation from the State Government of Saxony in September 2019 to consider building its next HPA plant in Saxony.
This deal provides Altech with an initial 12-month term during which it can exercise its purchase option, with the ability to extend the option period by a further 12-months via mutual consent.
Competitive purchase price
The purchase price for the site is confidential but ATC notes that on a per-hectare basis, the price is considerably less than comparable brownfields industrial sites in Malaysia or Western Australia.
During the option period, Altech will have access to the site for planning and assessment purposes.
Altech is investigating a second HPA plant specifically to service forecast demand for HPA from Europe’s burgeoning EV and renewable energy battery sectors.
Managing director Iggy Tan said: "Whilst we have been focused on completion of finance and the continuation of construction of Altech’s first HPA plant in Malaysia, the increased fiscal support for the EV and renewable energy sectors recently announced by the EU and Germany, combined with the forecast HPA supply deficit in coming years, has prompted us to move and secure this excellent HPA plant site in Germany – albeit earlier than I had anticipated.
“A HPA plant takes 4-5 years to design, permit, fund and construct. To meet the forecast HPA supply deficit, Altech needs to be proactive and put in place a plan for its next plant today, whilst staying extremely focused on the first facility in Johor.”
Schwarze Pumpe Industrial Park
Schwarze Pumpe Industrial Park in northeast Saxony is well serviced by existing infrastructure including reticulated electricity and natural gas, rail and roads.
This industrial park is 120 kilometres from Berlin and 78 kilometres from Dresden.
Saxony hosts production sites for Volkswagen, BMW, Porsche and Daimler and the region has excellent research facilities like the Fraunhofer Institute for Electronic Nano-systems, which are very focused on ceramic (HPA) nanotechnology in energy storage.
EU’s COVID-19 Green Recovery Plan
ATC said the European Commission (EC) recently released its €750 billion COVID-19 Green Recovery Plan which is focused on economic revival and support of the European Green Deal 'Next Generation EU'.
The funds allocated to the 'Next Generation EU' economic recovery plan are earmarked in particular to accelerate Europe's green and digital transition, with the EC to focus on unlocking investment in clean technologies and value chains, such as renewables and energy storage technologies - including batteries.
This plan includes support for the financing of one million new charging points for EVs across Europe and the implementation of a critical raw materials action plan covering e-mobility, batteries and renewable energy.
Altech believes that HPA, as a critical input into lithium-ion battery manufacture, would fall within the scope of the EU action plan.
Also, a draft of the European Recover Plan (ERP) included a €20 billion EU-wide purchasing facility for clean vehicles and a €40-€60 billion clean automotive investment fund, to accelerate investments in zero-emissions drive trains.
Although this level of detail was not included in the final high-level EU ERP communique – it is indicative of strong EU fiscal support for the European EV and renewable energy storage sectors, it added.
Germany’s stimulus package
Germany has offered more details of the EV industry fiscal support that it has incorporated in its economic stimulus package post-COVID-19.
Its €130 billion coronavirus stimulus package announced in June 2020 includes the following pillars:
➢ €2.5 billion will be spent on battery cell production and charging infrastructure;
➢ A 50% increase (to €9,000/vehicle) on the cash subsidy for EV purchases; and
➢ All service stations must offer electric car charging points to help remove refuelling concerns and boost consumer demand for EV’s.
The European and German initiatives are expected to provide a significant boost to EV demand along with the broader stimulus plan that included taxes to penalise ownership of large polluting combustion-engine sports utility vehicles.
Germany’s announcement follows a French initiative to boost electric car sales in the country.