Impact Minerals: Developing Critical High-Purity Alumina Project in Australia

• Impact Minerals (ASX:IPT) is developing the Lake Hope high purity alumina (HPA) project in Western Australia
• HPA is a crucial mineral for the energy transition, with growing demand from LEDs, sapphire glass, lithium-ion batteries, and other high-tech applications
• Impact's project involves simple mining (digging 1-2m deep) of aluminous clay from a salt lake, then processing offsite to produce 4N (99.99% pure) HPA
• Key milestones: PFS completing Q2 2025, pilot plant operational by mid-2025 to provide HPA samples to potential customers
• Long-term plans to scale up to 10,000 tpa HPA production; will likely pursue a staged approach to limit technical risk and capital requirements

High purity alumina, or HPA, is a niche mineral that plays a crucial role in the ongoing energy transition. Impact Minerals (ASX:IPT) is working to bring its Lake Hope HPA project in Western Australia into production over the next few years. 

What is High Purity Alumina? 

HPA is aluminum oxide with a purity of at least 99.99%. While not widely known, it is indispensable for a range of high-tech applications. The principal use is in LEDs - the sapphire wafers found in LED lights are made from HPA. With incandescent bulbs being phased out and fluorescent lighting next on the chopping block, demand for LEDs, and by extension HPA, is poised for significant growth.

HPA also has important uses in lithium-ion batteries, where it serves as a coating for separators, and in sapphire glass, which has applications in smartphones, wearables, military equipment and more.

Lake Hope - A "Dig and Deliver" Project

Impact Minerals' flagship asset is the Lake Hope project in Western Australia. What sets Lake Hope apart is its very simple geology - the aluminous clay material sits in a salt lake, with the top 2 meters of the lake bed hosting a "unique set of minerals" that are "extremely fine grained" and contain an aluminum-bearing mineral suite perfectly suited for HPA production.

As Dr. Jones described it,

you can imagine straight away that that's going to be a fairly easy thing to dig up and that's certainly the story that we've been telling and showing to investors and that's probably the easy bit.

In essence, the project is "dig and deliver" - Impact will dig up the material to a depth of just 1-2 meters, stockpile it, and truck it to an industrial site in Perth for processing. This approach greatly simplifies permitting and lowers costs compared to a traditional mining operation. There will be no crushing, no explosives, just a simple dig and deliver model.

The Perth processing facility is another advantage - it will be located next door to a hydrochloric acid plant, one of the two main reagents needed (along with potassium hydroxide) to process the material into HPA. Both reagents will be "available at the gate" with the by-product waste acid likely recycled and/or returned to the reagent suppliers.

Interview with MD Dr. Mike Jones

HPA Processing - Solving the Acid Riddle 

While the mining is simple, HPA processing is complex and highly technical. Impact has assembled a team of world-class experts to tackle the challenge.

One of the key challenges the team has solved is acid consumption. As Dr. Jones related,

you learn a few things along the way, you learn a few secrets of why most of the other HPA projects have failed, certainly using natural feedstocks, and that actually comes down to an acid use problem.

Essentially, HPA production is acid intensive, to the point where reagent costs and availability become prohibitive, especially when scaling to higher production. The unique nature of Impact's ore and its innovative processing circuit design cut acid consumption in half compared to other projects. Combined with an acid regeneration unit, this makes reagent use manageable and economical.

Project Economics and Development Timeline 

Preliminary assessment outlined compelling project economics, including an NPV over A$1 billion, capex of A$250 million, and opex around US$4,000 per tonne of HPA. An updated PFS is on track for completion in Q1 2025 and will refine those estimates.

Looking ahead, Impact aims to have a bench-scale pilot plant operational by mid-2025. This pilot facility will initially be capable of producing kilogram-scale quantities of material, allowing Impact to provide sample material for potential customers' initial testing requirements.

The company is considering various scale-up options, though these remain under evaluation.

The Investment Thesis for Impact Minerals

• HPA demand is growing rapidly due to increased adoption of LEDs and rising consumption from lithium-ion batteries, sapphire glass and other high-tech applications
• Impact's Lake Hope project is a key HPA projects globally, with a resource already defined, processing circuit proven at lab scale
• Project is geologically simple, with a "dig and deliver" model that reduces permitting hurdles and operating complexity; location adjacent to key reagent suppliers is also a major advantage
• Veteran management team with experience developing major projects and critical "know how" in specialty materials like rare earths and HPA
• PA demonstrates robust project economics; NPV over A$1B, low capex and opex per industry standards
• Upcoming catalysts include updated PFS in Q1 2025, & Pilot Plant commissioning mid-2025

Macro Thematic Analysis:

When asked about the market outlook for HPA, Dr. Jones' response captured both the enormous opportunity and the challenges companies like Impact face in bringing new supply online:

Global demand, as opaque as the market is, it's something in the order of 70,000 to 80,000 tonnes. Doesn't sound very much, but there's only a handful of suppliers. The balance becomes getting the offtake and then getting the capital to be able to scale up, and that's a challenge we'll take on as we move through the technical challenges and demonstrate we can do what we say we can do.

The HPA market today is in a sense where lithium was a decade ago. Demand is rising fast but supply is opaque, pricing is not transparent, and new entrants face major hurdles proving their technology and product while competing for scarce capital from risk-averse investors.

The companies that will ultimately succeed and capture the exponential growth in HPA demand over the coming decade will be those who can prove their process, demonstrate product quality, secure offtakes, and scale production while maintaining discipline on costs and aggressive but achievable timelines.