Due diligence studies on Malaysian HPA plant plan positive
Leading high purity alumina (HPA) specialist Altech Chemicals Limited (ASX: ATC) has achieved another important step in its path to securing finance for a proposed new HPA plant in Malaysia.
After a significant due diligence programme, Altech has received a target date of 14 December 2017 for a decision by a German government inter-ministerial committee (IMC) for export credit project finance cover (ECA cover).
Altech revealed that a positive decision of the SMS group GmbH (SMS) and a KfW IPEX-Bank ECA application will result in the award of a legally binding offer of cover by the Federal Republic of Germany for the majority of the debt portion of funding required for the Malaysian plant and the company will then be in a position to proceed to secure project equity.
Altech’s managing director Iggy Tan said the successful conclusion of project due diligence and the no fatal flaws finding all bodes well for a positive ECA application assessment.
“Altech’s project team and our partners have an intense six week period ahead, as we work to finalise all project information ready for submission of the PwC expert opinion report and the application for ECA cover,” Mr Tan said.
Perth-headquartered Altech’s German engineering, procurement and construction (EPC) contractor SMS is targeting mid-October 2017 to finalise the EPC contract price for the construction of the Malaysian HPA plant. The final EPC price and HPA plant design is required for the ECA cover application to determine the final amount of project debt and equity.
Under the fixed priced turnkey EPC contract proposed by SMS, plant capacity has been upgraded to 4,500 tonnes per annum, and at the request of financing parties, the plant design now incorporates a flexible finished product line capable of producing HPA for both the synthetic sapphire industry (4,500 tpa of high density pellets) and HPA for the lithium-ion battery industry (1,500 tpa of powder at sub-micron particle size). This capability was not in the original plant design or feasibility study.
Altech added that as a condition of the debt financing process the project has been significantly de-risked in many areas.
The company said that whist the charges are significantly more expensive than the original design, there incorporation further de-risks the project by enhancing the plant’s capacity to achieve the required 99.99% finished product purity standard. Also, plant emissions targets have been upgraded to international requirements.
Updated capital costs and study details are expected to be available and announced in October 2017, following notification by SMS of the final EPC contract price for construction of the Malaysian HPA plant.
HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire. Synthetic sapphire is used in the manufacture of substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components.