FYI Resources (ASX:FYI) Tapping Potential Opportunities in the HPA Market

Summary

  • FYI Resources (ASX:FYI) is developing the Cadoux Kaolin Project to become a dominant participant in the HPA market.
  • As per FYI, the HPA market is observing dramatic consumer-driven growth and is projected to become US$4.49 billion by 20221.
  • Potential increase in EV adoption is likely to stimulate HPA demand as HPA remains a key part of a functional lithium-ion battery.
  • Lighting market is estimated to provide long-term uptick in HPA demand as it continues to turn towards LEDs, with HPA being a core part of LEDs that cannot be replaced.
  • FYI appears to be ideally positioned to meet the potential uptick in HPA demand via its world-class Australian HPA project.

High Purity Alumina (HPA) developer, FYI Resources Limited (ASX:FYI) is positioning itself to become a significant producer of quality Al2O3 in the rapidly growing HPA market. To deliver on its stated objective, FYI is developing an integrated HPA project in Western Australia – the Cadoux Kaolin Project.

Cadoux is a world-class HPA project, which has best-in-class project economics with lowest quartile capex and opex. The project boasts excellent infrastructure with ideal deposit geology and optimal characteristics for HPA processing.

To Know More About the Cadoux Kaolin Project, Click Here!

HPA Demand Growing Substantially

FYI is developing the Cadoux Kaolin Project for general as well as traditional consumer markets to become a dominant participant in the growing HPA market.

FYI forecasts a considerable surge in demand for HPA in the future as HPA forms a substantial part in high-performance electronics. The Company believes that new applications and technologies have created significant demand and market opportunities for HPA.

As per FYI, the HPA market is observing dramatic consumer-driven growth and is projected to become US$4.49 billion by 20221. FYI further states that the current global 4N HPA market demand is ~60ktpa, which this is anticipated to increase to ~90ktpa by 2022 and >130ktpa by 20252.

The remarkable increase in HPA demand is believed to be underpinned by two key markets: traditional (LEDs, electronics, e-screens, etc) and batteries and static power storage (Electric Vehicles or EVs, power walls). As per FYI, the growth is further driven in combination by government greenhouse emissions and energy targets coupled with consumer-led demand.

EVs & LEDs Facilitating HPA Demand

FYI quoted Allied Market Research – HPA Report, which states that EV sales continue to increase worldwide, rising by ~59% per annum since 2014 to more than 2 million units sold internationally in 2018.

Currently, China leads the way with EV adoption via positive government incentives, while Europe and the US are starting to implement similar policies.

The Company expects an expansion in the EV capabilities to larger vehicles, including SUVs as global automakers turn their strategy towards EVs. FYI anticipates significant growth in EV adoption, with EVs representing just 2.2% of international vehicle sales worldwide3.

Potential increase in EV adoption is likely to stimulate HPA demand further as HPA remains a key part of a functional lithium-ion battery.

According to FYI, a shift of the lighting market towards LEDs is further expected to stimulate HPA demand in the future. Growing environmental awareness and stringent government emissions policies and targets are inducing a transition towards LEDs in the lighting market. Consequently, expensive, old, and inefficient lighting applications are being legislated out.

FYI reports that the LED market is likely to grow to US$54 billion by 2022 and take a significant share of the US$110 billion global lighting market4. The Company further mentions that the HPA demand for use in LEDs is projected to reach 85ktpa by 20285.

The lighting market is estimated to provide long-term uptick in demand for HPA as it continues to turn towards LEDs, with HPA being a core part of LEDs that cannot be replaced.

In a nutshell, an expansion in the EV adoption and a continuing transition towards LEDs are anticipated to encourage HPA demand in the future. FYI appears to be ideally positioned to meet this potential uptick in HPA demand via its world-class Australian HPA project.

FYI shares traded 6.3% higher at $0.170 on 9 November 2020.

To Read FYI’s September Quarter Results, Click Here!

  1. Allied Market Research, World High Purity (HPA) – Opportunities and forecasts 2015-2022
  2. CRU HPA Market Research 2018
  3. Allied Market Research – HPA Report
  4. Zion Market Research LED Report | McKinsey – Global Lighting Market Report
  5. CRU HPA Report

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