Investor Site Visit to View HPA Plant Construction Progress
- Successful inaugural investor site visit to observe HPA plant construction progress
- Stage 1 construction progress observed
- Attendees included KfW IPEX-Bank, Macquarie Bank, CIMB Bank and Petra Capital
- Various potential equity and joint venture partners in attendance
The one day visit commenced at the Company's Johor office located within the Tanjung Langsat Industrial Complex, where Altech managing director Iggy Tan provided a corporate update that covered the stage 1 construction plan; the status of project financing, corporate funding and the option to introduce a joint venture partner at project level; the plan to initiate stage 2 construction; and concluded with a site safety briefing and induction by the appointed EPC contractor SMS group of Germany. An inspection of the ~4 hectare HPA plant site and a detailed explanation of the stage 1 construction works followed - the HPA plant site is conveniently located approximately 300 metres from the Company's Johor office.
In attendance for the visit were Altech board chairman Luke Atkins, non-executive director Peter Bailey and alternate director Uwe Ahrens - also representing a major shareholder, the Melewar group. Other attendees included:
- Stefan Eitel (director metals & mining team) of KfW IPEX-Bank, who spoke to the delegation about the US$ 190 million committed project senior debt facility;
- Mr Herbert Weissenbaeck (senior vice president strategic project development) of SMS group GmbH, the appointed EPC contractor for HPA plant construction and commissioning. Mr Weissenbaeck provided a comprehensive overview of the lump sum, fixed priced, turn key EPC contract and described the completion, throughput, process and quality guarantees that are incorporated in the construction contract. Mr Weissenbaeck explained that whilst such guarantees are unusual for a first-of-kind plant, SMS's confidence in providing the guarantees comes from in excess of 10-years of internal test work and studies at its own laboratory on the kaolin to high purity alumina hydrochloric acid process that Altech will employ in its HPA plant.
- Managing director of Petra Capital, Mr George Marias. Petra Capital is an independently owned wholesale stockbroking firm and has been supporting Altech and its HPA project, and access to capital in the Australian and international equity markets for more than two years. Mr Marias was impressed with construction progress at the site and the excellent infrastructure and facilities that the large Tanjung Langsat Industrial Complex provides.
- A Macquarie Bank representative - as part of its detailed project due diligence for a proposed US$90m mezzanine debt facility. Altech announced 8 March 2019 that it had signed an exclusive mandate with Macquarie as its preferred mezzanine lender. The bank's appointed adviser (Advisian) has now completed its technical review of the project and the bank has initiated a market review having appointed London firm CRU consulting, and is progressing with legal reviews and the appointment of Australian, Malaysian and German legal firms.
- Representatives from CIMB bank, Kuala Lumpur. The bank is mandated to introduce potential Malaysian and South Asian joint venture partners and/or equity investors for the project.
- Representatives of a number of private equity groups, battery manufacturers and specialty materials industry participants from Malaysian, Singapore, South Korean and Hong Kong, as potential investors were also in attendance.
- Other participants include the representatives from a variety of predominantly Malaysian professional service providers such as legal, taxation and audit; representatives from existing institutional shareholders; selected media; and Altech staff from its Perth office.
For most stakeholders and investors the site visit was their first time to visit the plant location and the Tanjung Langsat Industrial Complex. For some attendees it was their first visit to Malaysia and to Johor, many expressed their surprise at the scale of industrial development in Johor, the established infrastructure and services that are available, and the ease of transit from Singapore airport (where most arrived) to Johor. For potential equity and/or joint venture investors the visit was an important part of their investment decision process - as the Company continues to explore the possibility of selling up to 50% of the project to an industry joint venture partner to share the final project equity funding. The Company plans to conduct regular investor and stake- holder site visits as HPA plant construction activities continue.
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About Altech Chemicals Ltd
HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire. Synthetic sapphire is used in the manufacture of substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components. There is no substitute for HPA in the manufacture of synthetic sapphire.
Global HPA demand is approximately 25,315tpa (2016) and demand is growing at a compound annual growth rate (CAGR) of 16.7% (2016-2024), primarily driven by the growth in worldwide adoption of LEDs. As an energy efficient, longer lasting and lower operating cost form of lighting, LED lighting is replacing the traditional incandescent bulbs.
Altech Chemicals Ltd