Altech Chemicals advances funding arrangements for construction of Malaysian high purity alumina plant

Altech Chemicals (ASX: ATC) continues to work with UK-based structuring agent Bedford Row Capital Plc and Australian firm Bluemount Capital on finalising a US$144 million (A$196 million) green bond offering to fund construction of its planned high purity alumina (HPA) processing plant in Malaysia.

Due diligence on financial, legal and environmental, social and governance (ESG) aspects of the project have concluded, and legal counsel from various jurisdictions have provided reviews of relevant documentation.

An initial bond offering “reach out” phase to potential subscribers has been finalised with more than 80 groups registering an interest.

Detailed presentations and one-on-one discussions are being scheduled on request, and these are expected to continue for some time.

Secondary debt

Approximately US$100 million (A$136 million) of the bond issue will be used as secondary debt for the construction of Altech’s HPA plant in Johor, with the balance servicing bond interest during the plant’s construction phase.

The bonds will be issued by UK-based green bond issuance platform Sustainable Capital Plc and will be subordinate to the senior project finance of US$190 million (A$259 million) committed by Germany’s government-owned KfW IPEX-Bank.

Additional equity

In parallel with the bond offering, Altech is progressing an additional equity component of its HPA project funding requirement with potential US investors.

Global investment bank DelMorgan & Co was appointed in mid-2021 to manage this process and has recently commenced a targeted marketing and reach out strategy.

Corporate presentation packs are being distributed and Altech is staging briefings with potential subscribers on request.

Altech is aiming to identify a 49% equity partner to provide approximately US$100 million (A$136 million) in equity funding as a project level investment.

Leading supplier

Altech plans to become one of the world’s leading suppliers of 99.99% (4N) high purity alumina through the construction and operation of a 4,500-tonne-per-annum HPA processing plant at Johor.

Feedstock for the plant will be sourced from the company’s wholly-owned near surface kaolin deposit at Meckering in Western Australia before being shipped to Malaysia.

In-demand product

HPA is a high-value, high-margin, in-demand product critical to the production of synthetic sapphire which is used in the manufacture of substrates (for LED lights), semiconductor wafers (used in the electronics industry), scratch-resistant sapphire glass (used for wristwatch faces) and smartphone components.

Increasingly, the product is used by lithium-ion battery manufacturers as a coating to improve battery performance, longevity and safety.

By 2028, global HPA demand is forecast to be approximately 272,000 tonnes per year, driven by the increasing adoption of LEDs and demand from lithium-ion battery manufacturers servicing the growing electric vehicle market.