$12m of Grant Support from Saxony State Government
The grant offer follows the July 2020 signing of an option to purchase agreement by Altech's wholly owned German subsidiary Altech Industries Germany Gmbh, for a ~10 hectare industrial site in the Schwarze Pumpe Industrial Park, Saxony (refer ASX announcement 14 July 2020) and a recent joint site visit to the industrial park by Altech alternate director Mr Uwe Ahrens accompanied by various Altech consultants, Saxony State Government officials, Spreetal Municipality officials, and Industrial Park senior management (see figure 1 below). The site visit also marked the commencement of a detailed due diligence and feasibility study process by Altech, to determine the viability of a second HPA plant in Germany.
In its letter to the Company, the Saxony state government has pledged its continued fullest support for possible construction of a HPA plant by the Company, and advised that the State Ministry for Economics, Labour and Transport (SMWA) and the Saxony Development Bank (SAB) are able to assist in the development of the proposed project. The letter further stated that: "from an industrial policy point of view, Altech's project is very much welcomed in the Region, Lausitz. Against the background of the developing electro mobility and the companies already having been established in this industry segment of electric vehicle construction and battery production in this region, synergy effects are expected. Saxony has industrial experience in battery production, especially in nearby Kamenz area, and has advantageous prerequisites as an industrial and research location".
Altech managing director, Mr Iggy Tan said that the support letter from the Saxony State Ministry is very encouraging. "In essence, the grant means that if we were to determine that it was commercially viable to construct a second HPA plant in Germany, an amount of ~A$12.2 million would be available. Altech however remains focussed on delivering the close of funding for our first HPA plant in Johor, Malaysia and the re-commencement of construction. However, by evaluating this opportunity in Germany we are quickly responding to Europe's push to bring its supply chains closer to home and to increase its self-reliance for critical raw materials - such as those that are used in the manufacture of lithium-ion batteries. We see this as a potential opportunity that cannot be ignored, especially given Altech's strong established links to Germany - both on our share register, our board, and the relationships we have built with SMS group and German Government owned KfW IPEX-Bank", he said.
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