Independent Confirmation of HPA Project's Green Credentials
This positive project assessment, formally termed a "second opinion", confirms that Altech's HPA project is of a type suitable for finance via green bonds. The project can now be considered by investors that participate in the green bond market, the size of which is approaching US$250 billion annually and a large portion of which is active in Europe.
The CICERO evaluation was initiated in mid-March 2020, and involved an overall assessment and review of the project's Green Bond framework and documentation, which included both governance and transparency considerations. In its Green Bond Second Opinion Report, a copy of which is available on Altech's web site (see link below), CICERO assessed the project's overall framework as a Light Green shading and assessed a governance score of Good. CICERO also noted that "a (higher) Medium Green (project) shading could be achieved if renewable energy solutions at some scale are implemented", which is something that the Company is currently investigating.
The project's green shading score would not affect bond pricing, rather it provides a transparent mechanism by which green bond investors are able to categorise their investment in terms of climate risks and impacts.
In considering the projects strengths, CICERO noted that "Altech's process includes recycling processes and 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 chemical process is recycled and reused in the process plant."
The project assessment was initiated by Frankfurt stock exchange listed Altech Advanced Materials AG (AAM), of which Altech is a 29.9% shareholder. As announced on 30 January 2020, AAM has executed an agreement with a Swiss based international investment bank to act as Placement Agent in relation to the issuance of equity or other equity instruments (securities) by AAM via private placement. AAM is aiming to secure funding to position it to exercise its option to acquire up to a 49% interest in Altech's HPA project for US$100 million. This positive second opinion report is expected to assist AAM in its capital raising initiative by opening the project for the large pool of European green investor funds, such as those that may participate in the green bond market.
Commenting of the CICERO Green Bond Second Option Report, Altech managing director and AAM director Iggy Tan said "the second opinion report formalises the view that Altech's single step HPA process is an energy efficient green process - a real game changer in terms of environmentally friendly, energy efficient and consequently lower cost production of high purity alumina. The report should be of considerable assistance to AAM and will open up a new group of potential investors for this exciting project.
Link to Altech web site page to view the CICERO report:
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