Altech Chemicals (ATC) - Trebling Car Battery kWh Realistic Target

Altech Chemicals Limited is an ASX-listed company (ASX: ATC) focusing on high purity alumina. The company aims to become one of the world's leading suppliers of 99.99% (4N) high purity alumina (HPA).

Matthew Gordon spoke to Iggy Tan, Managing Director of Altech Chemicals (ASX: ATC) to discuss the company's high purity alumina projects and the company’s plans for the year. 

Company Overview

HPA is a critical component in the production of synthetic sapphire, which is used in the manufacturing of LED lights, scratch-resistant sapphire glass, and various smartphone components. HPA is also used in the production of lithium-ion batteries as the coating on the battery’s separator. The HPA coating improves battery performance, longevity and safety. The global HPA demand was approximately 19,000 tons in 2018 and is estimated to grow by 30% each year in the next 10 years to 272,000 tons per annum in 2028.

The company has two HPA projects, the first being its HPA production facility located in Johor, Malaysia. The 4,500 ton per annum HPA production facility processes kaolin sourced from the company’s 100%-owned kaolin deposit in Meckering, Western Australia. The project has been accredited as a green project and produces 49% fewer greenhouse gases than traditional processes.

The company’s second project was founded after the incorporation of silicon into lithium-ion batteries showed to have two challenges, namely expansion and first cycle loss. The company was able to address this through the coating of silicon with a 2 nm thick layer of HPA, which also increases energy density by 30%. The project is based in the Saxony region of Germany and aims to meet the electric vehicle (EV) demand of European car manufacturers aiming to be all EV by 2030.

HPA production project

The company plans to build and operate a 4,500 ton per annum high purity alumina (HPA) processing plant in Johor, Malaysia. The feedstock for the HPA production facility will be sourced from the company’s 100%-owned kaolin deposit at Meckering, Western Australia.

The HPA production project boasts robust economics over a 30-year production lifespan. The project has a CAPEX of USD$ 298 million with an average operating cost of USD$ 9.9 per kg HPA produced. Altech Chemicals released a final decision study (FIDS) on the project with highlights including a pre-tax NPV7.5 of USD$ 505 million. The project has an internal rate of return of 22% and has a full-rate payback period of 3.9 years. The produced HPA is planned to be sold at USD$ 26.9 per kg resulting in a gross margin of 63%.

The company has an exclusive offtake agreement with Mitsubishi and is fully permitted throughout the entirety of the project. Altech Chemicals completed the second stage of the construction works at its Malaysian production facility in 2020. The project was executed on time and on budget even throughout the Covid pandemic. The HPA project has been placed in care and maintenance whilst the company aims to source project financing for the final construction phase.

The company is looking to source USD$ 400 million to fund the HPA production facility, with the facility accredited as a green project by CICERO in Norway. The production facility produces 49% fewer greenhouse gases than traditional processes. The green nature of the project also lends itself to the possibility of green bond financing, a process with which the company is currently also underway with. Altech Chemicals has taken to downstream value creation as it sources financing for its HPA production facility.

HPA coating

The downstream value creation of the company is the coating of graphite particles with a nanolayer of alumina. The company achieved a breakthrough in late November 2021 with it creating a workable graphite-silicon anode at its research and development laboratory in Perth, Australia. The graphite-silicon anode has long been a significant challenge in the lithium-ion battery industry. The addition of silicon to the graphite part of an anode leads to 10 times larger anode energy density. The addition of silicon however has in the past led to the fracturing of the anode. The coating of the anode with HPA solves the fracturing and first cycle loss challenges.

The company’s HPA coating discovery has led to the company focus on the commercialisation of the technology. Altech Chemicals has acquired land in Saxony, Germany, as well as started with a pre-feasibility study of its proposed silicon graphite battery plant.  The pre-feasibility study is based on a 10,000 tons per annum plant that is aimed at fulfilling the European EV lithium-ion market. The company has already raised interest in the European battery markets with it signing two NDA’s with German automakers as well as an NDA with a European battery producer.

Altech Chemical has recently raised USD$ 10.2 million to construct its planned 137,000 kg pilot plant.

Company future

Altech Chemicals is valued at AUD$ 125 million currently and believes that it holds the potential for large investor returns. The company believes that its HPA coating discoveries and 30% increase in battery energy density is just the beginning. The company is halfway through the financing process of its Johor project and has raised USD$ 219 million which is USD$ 119 million from a senior loan from KFW IPEX bank and USD$ 100 million in green bonds.

Altech Chemicals is focused on constructing its pilot plant in Saxony Germany as soon as possible and is fully financed to do so. The company has leased two bays in Saxony where it aims to construct its pilot plant. The company aims to deliver a testable product to the market and prove the significance of its HPA coating discovery.

The company is focused on the progress of its projects and states that for it, it is business as usual. The company is not focused on market fluctuations and will continue with its project development which it is fully funded to do. Iggy Tan, the managing director of Altech Chemicals states:

“We concentrate on the project, the market's the market, we've got no control of that and, but we, you know we're fully funded to get this pilot plant up and running.”

To find out more, go to the Altech Chemicals website