Altech Chemicals (ASX: ATC) has entered the final stages of a $195 million listed green bond offering to provide additional financing for the construction of a planned $400 million high purity alumina (HPA) plant in Malaysia.
The company has been working with UK structuring agent Bedford Row Capital PLC and Perth-based Bluemount Capital since October to prepare for the offering.
Of the funds raised, $135 million will be used as secondary debt for construction of the 4,500 tonne per annum plant in the state of Johor, with the balance put towards bond coupon (interest) repayments.
The bond offering will be in addition to a $257 million loan facility already committed by Germany’s state-owned KfW IPEX-Bank.
As is customary with these types of offerings, it is anticipated that subscriptions for the bonds will be received in several tranches over a period of months, rather than as a single tranche.
Financing mining projects
Green bonds are increasingly being used as a method of financing mining projects which promise to deliver environmental benefits and a more sustainable economy.
In May last year, Norway’s Centre of International Climate and Environmental Research formally assessed Altech’s HPA project as “green”, allowing it to be considered by the world’s green bond market investors.
The size of that market is believed to be approaching $339 billion and a large portion of it is active in Europe.
At the time of the assessment, the Centre said Altech’s process “does not create substantial amounts of solid or liquid waste that would go to landfill or tailing points”.
“In addition, nearly 100% of the hydrochloric acid used in its chemicals process is recycled and reused in the process plant,” it said.
Altech’s disruptive HPA production technology is estimated to deliver a 49% reduction in the carbon footprint of conventional HPA processing, and use 41% less energy.
High value and high demand
HPA is a high-value, high margin and highly-demanded product critical to the manufacture of synthetic sapphire for LED lights, semi-conductor wafers and scratch-resistant glass used in wristwatch faces, optical windows and smartphone components.
Increasingly, HPA is used by lithium-ion battery manufacturers as a separator coating, improving battery performance, longevity and safety.
Global HPA demand is forecast to sit at approximately 272,000t by 2028, driven by the increasing adoption of LEDs worldwide as well as demand from lithium-ion battery manufacturers to serve the surging electric vehicle market.
Feedstock for Altech’s Mayalsian HPA plant will be sourced from its wholly-owned kaolin deposit at Meckering in Western Australia and shipped to site.