Annual Report to shareholders
HPA PLANT CONSTRUCTION
In July 2018, the Company signed an agreement with its appointed engineering, procurement and construction (EPC) contractor SMS group, of Dusseldorf, Germany to enable Stage 1 construction works at the HPA plant site to commence.
An official ground-breaking ceremony took place on 8 August 2018 to signify the commencement of stage 1 construction. The ceremony was held at the Company's Tanjung Langsat HPA plant site and was attended by a range of dignitaries, project stakeholders and Altech's full board of directors and staff.
Site clearance works were completed by late July 2018 and the announcement of the commencement of Stage 1 construction works was made in January 2019, following the receipt of a development order approval from local authorities in Johor.
Stage 1 construction work activities included bulk earthworks; maintenance workshop foundation piling; the construction of retaining walls; on-site water detention tanks (OSD tanks); construction of the site sub-station structure and a maintenance workshop. The maintenance workshop will be used as covered storage during stage 2 of the HPA plant construction. The majority of stage 1 works were funded and pre-paid to the EPC contractor and will be credited against the US$280 million lump-sum fixed-price HPA plant EPC contract price.
An inaugural investor visit to the HPA plant construction site was hosted by the Company in mid-April 2019. Attendees were able to observe progress of construction activities; meet EPC contractor representatives and representatives from senior project lender KfW IPEX-Bank; and were informed of the Company's plan to initiate Stage 2 construction. For most stakeholders and investors the April 2019 site visit was their first time visiting the plant location within the Tanjung Langsat Industrial Complex; 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's Changi Airport (where most arrived) to Johor.
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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