Altech Chemicals Limited ASX: ATC FRA:A3Y Company Presentation Iggy Tan Managing Director
World leading producer of high purity alumina (HPA) Our Vision 4,500 tonnes pa
• Sapphire gemstone Natural form of high purity alumina (HPA) Al 2 O 3 • Formed by mother nature like diamonds • Sapphire • Colour from impurities Gemstone Nearly as hard as diamond (Mohs 9) •
• Purified alumina (Al 2 O 3 ) 99.99% (4N) purity or greater • Smelter Grade Alumina (SGA) ~ 99.5% • (5,000ppm impurities, mainly sodium) 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$27,000 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
Battery Energy Density Battery costs are reducing due to increased energy density
Battery Energy Density vs Temp Higher Operating Temperatures 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)
W Scope Sales Data Coated Non-Coated 100 90 HPA 80 70 Coated 60 Sales (%) 50 Separators 40 30 20 10 0 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Japanese separator manufacturer reports 40% HPA coated separators 11% only 12 months ago
Battery Separator Expansions
Global High Purity Alumina Forecast 2016 -2024 Source: Persistence Market Research 86,831 “High Purity Alumina Market – Global Industry Analysis and Forecast 2016- 2024” 75,637 HPA Comsumtion tpa Demand 65,036 55,350 for HPA 46,748 39,786 34,328 29,669 25,315 21,309 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 • 13 times ATC’s 4,500 tpa required to meet growth Global LED demand increase to 4.1 B units by 2024 (2015: 864 million) • Source: Navigant Research “LED Lighting: Global Outlook”
Separator HPA Demand Equivalent Number of Organisation Forecast 2025 (tpa) Altech HPA Plants Other Altech Chemicals 15,102 3.4 x Separator Petra Capital (mid case) 37,500 5.1 x Forecast CRU Consulting 76,000 16.9 x 2018 Average 38,034 8.5 x 1.6 kg HPA (US$100) for average EV car (40 KWh) • CRU most bullish on separator HPA growth • • Ave forecast of 38k tpa HPASC by 2025 (8.5 times ATC plant)
Organisation Total HPA Demand Equivalent Number of tpa 2025 Altech Plants Total HPA Persistence 62,519 tpa 14 x Forecast Petra Capital 122,000 tpa 27 x (inc LEDs) CRU Consulting 92,900 tpa 20 x 2018 Average 92,473 tpa 20 x • Ave forecast of 92 k tpa by 2025 (20 times ATC plant) No incumbent expansions announced • New entrants 4-5 years behind • • Demand will outstrip supply
• 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 • Indicated Resources 3.3Mt @ 30% Al 2 O 3 • Inferred Resources 7.9Mt @ 29.1% Al 2 O 3 • Deposit in Western Australia Low-Impurity Kaolin Feedstock Bauxite Canadian Altech % Darling HPA HPA Project Range* Project Al 2 O 3 34.5 22.77 30.5 SiO 2 21.5 53.29 56.3 Fe 2 O 3 21.2 8.36 0.7 TiO 2 2.00 0.98 0.7 K 2 O 0.24 3.41 0.1 NaO 0.005 1.42 0.1 * Typical Mean Analysis ^ JORC (2012) Mineral Resources (refer ASX Announcement 11 October 2016); the Company is not aware of any new information or data that materially affects the information included in this announcement and confirms that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.
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
Johor HPA Plant
Altech’s 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, one pending for process • • New entrants - possible breach of Altech patents
Pre-tax NPV 7.5 US$ 505 million • Internal Rate of Return (IRR) 22% • Payback (full rate) 3.9 years • Conservative • EBITDA US$ 76 million p.a. Bank Capital cost US$ 298 million • Model Production Costs - US$ 9.90/kg • • LT Sale Price - US$ 26.9/kg Gross Margin – 63% • 24
Current price in Japan - US$ 40.0/kg • Pre-tax NPV 7.5 US$ 1.1 billion • Internal Rate of Return (IRR) 33% • Current Case • Payback (full rate) 2.2 years Economics Capital cost US$ 298 million • EBITDA US$ 133 million p.a. • • Production Costs - US$ 10.50/kg Sale Price - Gross Margin – 74% • 25
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 buyer and seller • 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 28
Lab work completed • Batch pilot plant completed • SMS 8 years of independent lab/pilot work • Aiming to • Conservative design assumptions Under-promise Using 79% instead 90% Utilisation • Over-deliver Using 60% instead 90% Recovery • • Using 30% instead 34% Al 2 O 3 feed grade 3 Yr ramp up instead of 2 Yr • Possibility of 6,000 tpa • 29
Senior debt funding with KfW IPEX-Bank • Total senior debt of US$ 190 million • Senior Debt US$ 170 million export credit finance • Funding • 50% of plant – German suppliers Completed Low interest, long tenure • Best debt in the world •
Three work streams 1) Subordinated mezzanine debt Subject Term sheet received of US$90 m • Advancing to Due Stream term sheet of US$60m • Diligence Final Stage 2) Equity work stream Funding Lead - Petra Capital • Raised A$21.4m 3) Possible JV Partner • Partial project sell down 31
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