Altech Chemicals Limited ASX: ATC FSE:A3Y Company Presentation Iggy Tan Managing Director
World leading producer of high purity alumina (HPA) Our Vision 4,500 tonnes pa
• Sapphire & Ruby 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 problem for • electronics industry
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 Our Target Business
High Purity Alumina Synthetic Sapphire Sapphire Furnace (2,000 o C) Sapphire Crystal Boule Lithium Batteries High Purity Alumina Battery Separators / Cathode / Anodes Lithium Batteries
Lithium-ion Battery Separator Anode Sheet Separator Cathode Sheet HPA is used in lithium-ion battery separator coatings
Sapphire Applications LEDs Sapphire Wafer / Substrate Light Emitting Diodes LED Glass Sapphire Cores Sapphire Glass Smartphone and Lenses
LEDs – lighting of the future Conventional LEDs New LED products
Sapphire Glass HTC U Ultra (128Gb) o February 2017 o Sapphire crystal display Smartphone sapphire screen iPhone o Sapphire crystal lens o Finger print recognition
Sapphire Glass Scratch Test
• Global HPA demand 25,315tpa in 2016 1 Expected to increase to 86,831tpa by 2024 1 • Demand Growing at a CAGR of 17% 1 • • Driven by LED growth & lithium-ion batteries for HPA Entering a fast growing market • Altech production 4,500 tpa • 1 Source: Persistence Market Research “High Purity Alumina Market – Global Industry Analysis and Forecast 2016- 2024”
Global High Purity Alumina Forecast 2015 -2024 Source: Persistence Market Research 86,831 “High Purity Alumina Market – Global Industry Analysis and Forecast 2016- 2024” 75,637 Demand HPA Comsumtion tpa 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 • Global LED light demand forecast to increase to 4.1 billion by 2024 (2015: 864 million) Source: Navigant Research “LED Lighting: Global Outlook”
HPA Battery Separator Forecast GLOBAL SEPARATOR HIGH PURITY ALUMINA DEMAND 99.99% HPA Used in Lithium Battery Separators 15,102 Source: Altech Chemicals & Deutsche Bank Markets Research Industry Lithium 101 - 9 May 2016 13,848 HPA Comsumtion in Li-Ion Battery Industry, tpa 11,589 Number of ATC HPA Plants required 9,431 7,554 5,810 Key Assumptions: 3,985 HPA Coating 5g /m2 or 40 g/kWh Penetration rate of 6% pa from 2015 2,713 1,629 283 919 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
70% of HPA demand Asia Pacific (APEC) • World’s manufacturing hub • • Malaysian HPA plant location well-positioned HPA Transport, customer service, technical • Geographic credibility Demand Americas 14% Europe, Middle East, Africa 16% Asia Pacific 70%
• Six largest HPA producers: China (3), Japan (1), 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 Low-impurity • Deposit in Western Australia 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.
Altech owns 100% of kaolin deposit in WA • Low environmental impact • Meckering • 130kms from Fremantle Port • Mining lease (M70/1334) granted Kaolin Deposit Ore Reserve 1.2Mt @ 30% Al 2 O 3 for • 30 year (stage 1) mine-life
Lower quartile costs • • Kaolin feedstock shipped from WA Chemical-zoned industrial park • HPA Site (Tanjung Langsat) Location Sea container ports • Johor Plant site secured • • Malaysian government incentives
• Established HCl leach process Developed in 1980’s by alumina industry • Couldn’t compete with Bayer SGA costs • But great at producing HPA (no sodium-ions) • Altech HPA • However little demand for HPA in 1980s Process Demand for HPA is here today •
New HPA Demand + Established Process + Unique Deposit + Experienced People Shareholder Value Business Experienced People High Purity Strategy Deposit New Demand (Electronics) Established HPA HCl Process “the last piece of the puzzle is in place”
Altech HPA Process ROM Campaign Mining Sea Container MECKERING To Fremantle Shipping Sea Container Meta Kaolin Flash JOHOR Dryer Hydrochloric Acid Press Tube Cooler Screening Calciner Milling HCl Gas Polishing Screening Filter Filter 700 C Drum Scrubber > 0.3mm Quartz Oversize Stage 1 Crystalisation Acid Leach Sales Limestone & Lime Neutralised 99.99% Spray Centrifuge Jet Mill Cooler Silica Residue HPA Battery Grade Option Dryer Beads 1600 C Neutralising Al Cl 3 Sales Tank Crystals Packaging Press Tube Cooler Pelletiser Feed Tank Tunnel Kiln HCl Plant HCl Gas HCl HCl water water Gas Alpha Al 2 O 3 Press Tube Centrifuge Centrifuge 1250 C 700 C Screen HX Al Cl 3 Al Cl 3 Calciner Roaster Cooler Stage 3 Bead Mill Polishing Wash Stage 2 Crystalisation Filter Crystalisation HCl Wash HCl Wash
Work started early 2011 • • Extensive lab and pilot plant test work Successfully produced 4N 99.99% HPA • Going Off-the-shelf plant and equipment • commercial • Completed successful BFS
Altech’s HPA Plant – Malaysia Crystallisation Plant Residue Plant Acid Leach Calcination Final Product Kaolin Calcination Kaolin Plant Sea container unloading Security
Capital cost estimate US$78.7m • Payback period 3.7 years • Pre-tax NPV 9 US$357.5m • Highly • Highly attractive IRR 33.3% Attractive Operating cost US$9,070/t • Sale price US$23,000/t BFS • • Margin US$13,930/t EBITDA US$55.7m pa • Refer ASX Announcement titled “Altech Improves Financials of its HPA Project with BFS Update” dated 16 March 2016. Altech confirms that all material assumptions underpinning the production target and financial information derived from the production target continue to apply and have not materially changed. 27
Competitors US$14 - 17,000/t (Breakaway Research) • 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 • Secures sales for 100% of 4,000tpa HPA plant • Mitsubishi production signs full Exclusive global distributor • • Experienced with HPA off-take Strategic priority: lithium-ion batteries •
Debt funding with KfW IPEX-Bank • 60% of plant – German suppliers • Target of US$70m • Final stage of • Export credit cover of US$60m Debt Funding Low interest, long tenure • Approval Target sole lender – KfW IPEX-Bank •
SMS Group German EPC contractor • Lump sum turn key contract • Completion and cost risk • Lump Sum • Process & throughput guarantee Turn Key Equity investment contribution • Contract Detailed design at advanced stage • • Completing EPC cost estimate 31
• All consultants report 10 October • Final EPC price from SMS 16 October Final ECA Expert opinion report 9 Nov 2017 • Approval IMA ECA approval meeting 14 Dec 2017 • 32
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