FYI Resources Ltd (ASX:FYI) has strengthened its positive outlook for the high purity alumina (HPA) market following a marketing trip to China last month.
The company will use key information gained from an assessment of the Chinese HPA market in the pre-feasibility study for its Cadoux Kaolin Project in Western Australia and for product development.
READ: FYI Resources confirms kaolin resource suitable for high-purity alumina feedstock
FYI is positioning itself to be a significant producer and supplier of HPA as it continues to develop the project.
Drilling and analysis has confirmed that the kaolin resource has the characteristics to be used as feedstock in producing HPA grading 99.99% or greater, using an evolving process flowsheet.
Managing director Roland Hill said the Chinese domestic market for HPA appeared very supportive of new supply projects.
He said: “Attaining a good understanding of the dynamics of the China market is important to our strategy going forward.
“Our resulting view is very positive on the fundamental long-term outlook for HPA as we look forward to completing our pre-feasibility study in the September quarter.
“We will continue with our market evaluations of the other key markets of Taiwan, Japan and Korea during 2018.”
The company met with participants in the HPA sector during the China trip to gain insight into product specifications, characteristics and supply, and the demand and pricing metrics for the high-value 4N and 5N alumina products.
FYI produced HPA, which is 99.99% purity
Chinese HPA cost advantages eroding
A significant observation made by FYI is that traditional cost advantages for Chinese HPA production from bauxite processes are being eroded.
Advantages such as low labour rates and cheap raw materials and energy are being diminished by increasing inflation, power restrictions and China’s ever-increasing environmental regulations.
FYI has also engaged with a speciality metals advisory group with deep relationships into the markets of China, Taiwan, Korea and other Asian producers and consumers of HPA.
READ: FYI Resources' results confirm high-purity alumina potential for Cadoux kaolin
The HPA market is expected to see growth through an expansion of existing and new applications, according to commodity analysis group CRU.
CRU provided FYI with market intelligence on the increasing relevance of HPA, noting that traditional markets such as high-performance LED substrates and sapphire glass related product will continue growing.
Growth will also be impacted by a global uptake in electric vehicles and other emerging battery and power storage applications, which require high specification HPA in the separator component between the anode and cathode of the power cells.
By FYI’s evaluation 99.99% purity HPA will fetch between US$20-30 per kilogram, with upwards pressure from increasing demand and an evolving market.