Altech Chemicals Announces Approval Of Development Order For HPA Plant In Johor, Malaysia

On 24 January 2019, Altech Chemicals Limited (ASX: ATC, FRA: A3Y) announced that the Development Order for the Company’s 4,500tpa high purity alumina (HPA) plant in Tanjung Langsat Industrial Complex, Johor, Malaysia, has been approved with the commencement of site establishment works.

As announced by the company on 14 November 2018, the company was issued a land sub-title PTD number for its Johor plant which enables the company to submit the Development Order to local authorities. On 6 November 2018, the company announced about finalizing the site layout and design. Â

Altech Chemicals Limited is a leading supplier of HPA with 99.99% (4N). Altech has finalized a Final Investment Decision Study (FIDS) for the development of an HPA plant at Johor which will produce HPA directly from kaolin clay, obtained from the company’s wholly-owned kaolin deposit at Meckering, Western Australia.

With current HPA producers using expensive aluminium metal to produce HPA, Altech will be utilizing conventional “off-the-shelf” equipment to extract HPA (AL203) using an HCl acid-based process. The company is expecting lower costs with its differentiated process. The Company is currently targeting at locking funds for the project. It has implemented an agreement with SMS group, the EPC contractor, for beginning the Stage 1 plant construction.

Following the approval from local authorities valid from 1 January 2019, the establishment activities will include: establishment of site office, guard house and security, signposting of the entire site, construction of access ways into and within site; mobilization of construction plant and equipment; and project signage. Safety inductions have been completed for all sub-contractors involved in site creation activities.

Post the site is established, the company will begin its Stage 1 construction works which will include the construction of retaining walls, onsite water detention tanks, sub-station building and maintenance workshop. Most of the stage 1 works have been funded and pre-paid to the EPC contractor, which will be credited against the US$280 million lump-sum fixed-price HPA plant EPC contract.

The highly valued HPA is a critical ingredient for the synthetic sapphire production, used in the manufacture of substrates for LED lights with energy and cost efficiencies. HPA is also significantly used by electronics industry, optical windows developer, as well as wristwatch and smartphone makers. 2016 data evidence shows global HPA demand of ~ 25,315tpa with demand CAGR of 16.7% between 2016 and 2021, primarily attributable to the increasing worldwide dependence on LEDs.

Stock performance: Post the announcement, the shares of Altech Chemicals zoomed up by over 3%. ATC stock closed the day’s session at A$0.091, up by 3.41 % on 24 January 2019. The company has a market capitalization of A$50.39 million with 572.56 million outstanding shares. Although the price of the scrip is trading on the downside from the past six months falling by almost 46.7%, the share price has recovered by nearly 6% over last month.


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