Altech Chemicals Limited ASX: ATC FRA:A3Y Youbisheng Green Paper AG - PowerPoint PPT Presentation

Altech Chemicals Limited ASX: ATC FRA:A3Y Youbisheng Green Paper AG General Meeting Iggy Tan Managing Director

4,500 tpa High Purity Alumina Plant ● Sapphire substrates ● LED growing at 16% CAGR ● Massive electricity savings

• Sapphire gemstone Purified alumina (Al 2 O 3 ) • 99.99% (4N) purity or greater • Smelter Grade Alumina (SGA) ~ 99.5% • What is HPA? Bayer Process uses sodium hydroxide (NaOH) Sodium impurity is a problem for sapphire • and lithium batteries

High price High Purity Smelter Grade High Purity High Purity for purity Alumina Alumina Alumina Alumina HPA 99.999% (5N) SGA 99.5% HPA 99.9% (3N) HPA 99.99% (4N) >US$50,000 per t US$400 per t US$6,000 per t US$20,000 per t US$9,000 per t US$40,000 per t Our Target Business

LEDs & LITHIUM-ION BATTERIES LEDs Sapphire Wafer Sapphire Furnace (2,000 o C) Sapphire Crystal Boule LITHIUM ION Nano Powder Separator Coatings BATTERIES

LED Expansions Xiamen Changelight Purchases AIXTRON MOGVD Technology to Expands ROY LED Production

● Sapphire substrates ● LED growing at 16% CAGR ● Massive electricity savings

LEDs & LITHIUM-ION BATTERIES LEDs Sapphire Wafer Sapphire Furnace (2,000 o C) Sapphire Crystal Boule LITHIUM ION Nano Powder Separator Coatings BATTERIES

Battery Energy Density 1000 500 Battery Cost (US$/kWh) (LHS) Battery Energy Density (Wh/l) Battery Energy Density (Wh/l) 800 400 Battery Cost (US$/kWh) 600 300 400 200 200 100 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e 2022e Battery costs are reducing due to increased energy density

Battery Energy Density vs Temp 300 250 Specific Energy (Wh/kg) 200 150 100 Higher Operating Temperatures 50 0 LFP LMO LCO NMC NCA Cathode Evolution Cathode changes – higher operating temperatures

Normal Polymer Separators Polypropylene (PP) 155 o C HPA <135 o C required Polyethylene (PE) 135 o C for higher Polypropylene (PP) 155 o C temps HPA layer >200 o C Polymer membrane HPA Coated Separators (HPACS)

60 W Scope Separator Sales 50 51% HPA % of W-Scope Sales 40 39% Coated 35% 34% 30 31% 30% Separators 20 10 13% 12% 0 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Japanese separator manufacturer reports 40% HPA coated separators 12% only 24 months ago

Capex Plans of Battery Manufacturers Korea - 50-70 GWh by 2020 China 32 GWh by 2023 LG Chem Korea - 20 GWh by 2020 Japan - JV with Toyota 50x capacity by 2020 China - 50 GWh by 2020 Korea - 30 GWh by 2020 Sweden - Spending US$4 B to achieve 32 GWh

300,000 250,000 HPA Demand Forecast tpa 200,000 Demand 150,000 for HPA 100,000 50,000 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 30% CAGR demand growth • 272,000 tpa. by 2028 • Source: CRU Global HPA Outlook 2019

• CRU upgraded previous forecast to 272,000 tpa by 2028 • 30% CAGR demand growth 2028 Future LED market - will require higher quality • CRU Latest LIB separators demand 187,000 tpa by 2028 • Forecast • LEDs demand forecast 85,000 tpa by 2028 Significant supply deficit •

Supply Deficit Analysis 20,000 0 CRU warns -20,000 of significant -40,000 supply deficit -60,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Mid-term - Market balance Long-term - Supply gap About 20,000 tpa by 2021 • • Peaking in 2028 by 50,000 tpa New entrants 3-4 years behind •

Sapphire Glass Scratch Test

• HPA producers – Chemical companies China (3), Japan (2), South Africa (1) France (1) Sumitomo Chemicals (Japan) 3,020 Current HPA Others (15), 3,570 Sasol (South Africa) Huantou, 800 1,800 Producers Dailian Rall, 600 Nippon Light Metal, 1,100 Hebei Pengda (China) Baikowski (France) 3,000 1,200 Xuancheng Jing Rui Zibo Xinfumeng (China) (China) 1,200 2,500 Source: Technavio Research

Altech’s Differentiation Current HPA Producers Alumina Alumina Aluminium Refinery Smelter Dissolution Bauxite Smelter Grade Alumina Aluminium Metal 99.99% (4N) 99.5% HPA ~US$3,000 per tonne ALTECH HPA PLANT One Single Process Step Kaolin 99.99% (4N) (aluminous clay) HPA

• Very low iron (Fe) due to weathering • 12.7Mt JORC Mineral Resources^ (250 yrs) • Measured Resources 1.5Mt @ 30% Al 2 O 3 • Deposit in Western Australia Low-impurity Bauxite Altech Kaolin Feedstock % Darling Kaolin * Range* Al 2 O 3 34.5 30.0 SiO 2 21.5 57.9 Fe 2 O 3 21.2 0.4 TiO 2 2.00 0.7 K 2 O 0.24 0.2 NaO 0.005 0.01 * Beneficiated Kaolin in FIDS

Mining approval granted • Works approval granted • Meckering Simple free dig mining • Kaolin Deposit • Campaign mining, 2 months - 3 years feed in West Aust Then just sea container loading operation • Fremantle to Johor easy shipping •

Chemical-zoned industrial park • 60% lower operating costs • HCl plant nearby • HPA Plant to • Services, natural gas, electricity, water be in Johor, Access to 17 th largest container port • Malaysia 5-10 year corporate tax free • • No radioactive waste – chemical park

HCl Plant Leach & Neutralisation Fine Sand Kaolin Calcination Roasting & Calcination Kaolin Kaolin Receival Beneficiation HPA Finishing Plant Final Product Administration Control Room Lab TNB Main Substation Car Park Gatehouse Station Gat e

Altech’s Patented HPA Process ROM Campaign Mining Sea Container To Fremantle MECKERING Shipping Sea Container Quartz Removal JOHOR Screening Drum Scrubber Quartz Oversize

Altech’s Patented HPA Process Flash Dryer Hydrochloric Acid Cooler Filter Calciner Milling Screening Filter 700 C Acid Leach Meta Kaolin - Acid Leach Silica

Altech’s Patented HPA Process HCl Gas Stage 1 Crystalisation AlCl 3 Purification Centrifuge Al Cl 3 Crystals HCl Gas HCl Gas water water Centrifuge Centrifuge Al Cl 3 Al Cl 3 Stage 3 Polishing Stage 2 Crystalisation Filter Crystalisation HCl Wash HCl Wash

Altech’s Patented HPA Process Roasting & Final Product 99.99% Spray Cooler Jet Mill HPA Battery Grade Option Dryer Beads 1600 C Packaging Cooler Pelletiser Feed Tank Tunnel Kiln HCl Plant Quartz Oversize HCl Alpha Al 2 O 3 1250 C 700 C Screen HX Calciner Roaster Cooler Bead Mill Wash

Altech’s Patented HPA Process ROM Campaign Mining Sea Container MECKERING To Fremantle Shipping Sea Container Meta Kaolin Flash JOHOR Dryer Hydrochloric Acid 700 C Cooler Filter Screening Calciner Milling HCl Gas Polishing Screening Filter Filter Drum Scrubber > 0.3mm Stage 1 Crystalisation Acid Leach Sales Limestone & Lime Neutralised 99.99% Spray Centrifuge Cooler Silica Residue Jet Mill HPA Battery Grade Option Dryer Beads 1600 C Neutralising Al Cl 3 Sales Tank Crystals Packaging Filter Cooler Pelletiser Feed Tank Tunnel Kiln HCl Plant Quartz Oversize HCl Gas HCl HCl water water Gas Alpha Al 2 O 3 Centrifuge Centrifuge 1250 C 700 C Screen HX Al Cl 3 Al Cl 3 Calciner Roaster Cooler Bead Mill Stage 3 Polishing Wash Stage 2 Crystalisation Filter Crystalisation HCl Wash HCl Wash

Chemistry established in 1900s by Swiss • • US Gov & Alcoa developed further 1980’s No demand for HPA in 1980’s • Established New HPA growth demand (LEDs LIBs) • Proven • Altech applied open chemistry to Meckering Chemistry Very successful, disruptive, lowest cost • One patent granted, 8 pending •

Competitors • 1. We own our feedstock 2. Main reactant HCl re-used Bottom 3. Plant in low cost country (Malaysia) Quartile for Op Costs Altech Source: Persistence Market Research “High Purity Alumina Market – Global Industry Analysis and Forecast 2016- 2024”

Off-take sales agreement with Mitsubishi • First 10 years of HPA operations • Mitsubishi • Secures sales for HPA plant production Exclusive global distributor • 10 year Experienced with HPA • off-take • Strategic priority: lithium-ion batteries

SMS group German EPC contractor • Lump sum turn key contract • Completion and cost risk • Lump Sum • Throughput guarantee Turn Key Process & quality guarantee • Contract Third largest user of ECA finance • • Committed US$ 15 mil equity 33

Lots of “fat” in design assumptions • Using 79% instead 90% Utilisation • Aiming to • Using 60% instead 90% Recovery Under-promise Using 30% instead 34% head grade • 3 Yr ramp up instead of 2 Yr • Over-deliver • Possibility of 6,000 tpa 34

Pre-tax NPV 7.5 US$ 505 million • Internal Rate of Return (IRR) 22% • Payback (full rate) 3.9 years • • EBITDA US$ 76 million p.a. Economics Capital cost US$ 298 million * • Equity Model Production Costs - US$ 8.55 /kg • • LT Sale Price - US$ 26.9/kg Gross Margin – 68% • * Pre Finance Costs 35