Altech signs sales agreement with Mitsubishi

Published at Sep 24, 2015, in Technology

High purity alumina (HPA) player Altech Chemicals (ASX:ATC) has bagged a sales agreement with one of the largest industrial companies in the world, whereby the company will sell its product into the Japanese market.

It told the market today that it had appointed Mitsubishi as the exclusive seller and distriubutor of Altech’s final HPA product in Japan.

An agreement covering Japan could be somewhat of a boon for the company, as ATC told investors that Japan accounted for 21% of HPA demand in 2014.

Mitsubishi is Japan’s largest general trading company, with more than 200 bases in about 90 countries around the world, including Australia.

ATC told investors the deal would add star power to its trading dreams.

“We are delighted to partner with one of Japan’s largest companies and a very reputable name worldwide,” ATC managing director Iggy Tan said.

“Altech’s 4000 [tonnes per annum] HPA plant will position the company not only as one of the world’s largest producers of HPA, but also as one of the world’s lowest cost producers of HPA.”

Altech’s play

ATC is aiming to mine a 65 million tonnes JORC-compliant aluminous clay in WA to be processed at an advanced beneficiation plant at Meckering, with the aim of producing 25,000t of alumina-rich kaolin clay per year.

This clay will be taken to a full-scale 4000tpa HPA production plant, using its technology to produce a 99.99% pure HPA product.

ATC has already selected a site in Malaysia to build its HPA plant, where it is aiming to cut costs by about 40% compared to Australian producers.

It completed a bankable feasibility study at the end of June, three months ahead of schedule.

It said the project would have a capital cost of $US76.9 million ($A109.8 million), with an estimated payback period of just under four years.

The project is slated to have a net present value of $326.1 million, and ATC has put a long-term sales forecast target on its product of $23,000/t.

News that Mitsubishi is on board to sell the potential product may help in securing financing for the project.

It is aiming to start production of the final saleable HPA product in the fourth quarter of 2017.

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