A PROPOSED high purity alumina (HPA) plant at Johor in Malaysia is an integral part of a plan by Altech Chemicals to become one of the world’s leading suppliers of 99.99% (4N) HPA. The ASX-listed company has recently updated a bankable feasibility study (BFS) for the plant which confirms the financial and technical robustness of the project.
HPA is the critical ingredient required for production of artificial sapphire, which is used in the manufacture of substrates for LED lights, semi-conductor wafers used in the electronics industry and scratch-resistant artificial sapphire glass used for wristwatch faces, optical windows and smartphone components. There is no substitute for HPA in the manufacture of artificial sapphire and is, therefore, a high-value, high margin and highly in demand product.
Key outcomes of the updated BFS include:
- Increased estimated pre-tax NPV of US$358 million, up from US$326 million.
- Higher Internal Rate of Return (IRR) of 33%, up from 30%.
- Capex of US$78.7 million, up from US$76.9 million.
- Long-term sale price forecast unchanged at US$23,000/tonne for 99.99% (4N) product.
- Cost of goods sold slightly higher at US$9074/tonne.
- EBITDA of US$55.7 million per annum at full production.
Altech’s managing director Iggy Tan said, “This updated BFS confirms the financial and technical robustness of the HPA project, as was identified in the original BFS. Since the completion of the BFS in June 2015, the various technical consultants have taken time to conduct a detailed review of the entire HPA project, identifying optimisation opportunities, critically reviewing equipment selection, and updating all equipment and operating cost pricing.
“This is quite important given the changes that have transpired in the resources industry since the BFS was completed.
“The focus for Altech now is the finalisation of project financing, completion of final design and construction drawings, the formal appointment of the EPC contractor and the subsequent award of various works packages to enable the commencement of construction in early 2017.”
The company has secured a 30-year lease over a site in Johor Bahru for its proposed plant. The land is in a section of Tanjung Langsat Industrial Complex set aside for chemical facilities. The location has the ready availability of required consumables such as hydrochloric acid, limestone, quicklime, electrical power and natural gas, at highly competitive prices.
Johor is a highly sought after state for project development in southern Malaysia, linked to Singapore by causeway and with three ports and an international airport for cargo.