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Altech Chemicals has manufacturing licence approved for HPA plant in Malaysia

Published: 23:38 20 Feb 2018 GMT

High purity alumina
High purity alumina is an indirect ingredient for manufacturing LED lights

Altech Chemicals Ltd (ASX:ATC) has had its manufacturing licence for the proposed high purity alumina (HPA) plant in Johor, Malaysia approved.

Malaysian Investment Development Authority (MIDA) approval represents another major milestone towards the development of the plant, which will have an annual capacity of 4,500 tonnes.

Under the approval terms, Altech Malaysia must submit copies of various corporate documents.

Formal licence expected in June quarter

This is a largely administrative process, after which the formal manufacturing licence will be issued and Altech expects this to occur during the June quarter of 2018.

Iggy Tan, managing director, said: “The company is delighted with the support that it is receiving for its HPA project from MIDA and the Johor and Malaysian governments.

“The prompt assessment of our manufacturing licence application is testament to the support for our proposed plant, which will represent a total investment of approximately 1.2bn ringgit in Malaysia.”

READ: Altech Chemicals sees heightened interest in its alumina project in Malaysia

Issuing the formal manufacturing licence will allow the company to proceed to the next stage of state and local government approvals.

Company seeks ‘Pioneer Status’

Upon issue of the licence, Altech Malaysia’s application for ‘Pioneer Status’ (High Technology) investment incentive classification will progress.

Approved would see the project benefit from income tax exemption of 100% of its statutory income for five years from the start of commercial production.

An impression of the HPA plant planned for Johor, Malaysia.

Also, any accumulated losses and unabsorbed capital allowances (depreciation) during the Pioneer Status period can be carried forward and deducted from post period income.

READ: Altech Chemicals finalises US$190 million finance package for Alumina plant

Altech recently formalised a total debt package of US$190mln for the project.

The financing consists of a US$170mln debt package negotiated with the German export credit agency (ECA), with the balance of US$20mln at normal commercial terms.

The ECA covered loan is for an extended period with highly attractive terms, providing Altech with ample time to build the plant and bring it into production.

Aim to be a world-leading HPA supplier

Altech is aiming to become one of the world's leading suppliers of 99.99% high purity alumina.

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 electronics, and scratch-resistant sapphire glass for wristwatch faces, optical windows and smartphone components.

There is no substitution for HPA in the manufacture of synthetic sapphire.

Annual global HPA demand is circa 25,315 tonnes and demand is growing at a compound annual growth rate of 16.7%, primarily driven by the growth in worldwide adoption of LEDs.