Management information tends to have a high boilerplate content that we have read before. Although the CEO is accessible, I for one am loath to call him, because significant issues should be communicated to all shareholders, not just those who visit, telephone or eMail the CEO.
Demand shifted to finer grade Kaolin
What I think has happened is the Stanco offtake agreement allowed Stanco to order finer-grained kaolin than WAK could produce in volume. It is well known in the art that dry-sieving fine-grained powder is difficult, because static electricity conduces powder to agglomerate, and clog the meshes. There are solutions to the problem that, in loose terms, requires significant agitation on the top of the screen, and strong vacuum sucking behind the screen. I do not fully understand the technical issues, but they may be the angle of the jets of air, and moistening the atmosphere in the above-mesh chamber. If there is a coarser screen followed by a finer screen, the problem would arise in the latter.
In April 2023 I postulated on this HC subforum that Stanco wanted a finer product than what WAK could produce in volume, and that this occasioned less deliverable than WAK expected, because the 2020 off-take agreement gave Stanco the right to specify the product ordered. On 29 April 2023, you responded to my postulation in your 67519651 post with the words “Furthermore, we've been told there are off take agreements in place for over 90% of our production. Now we're told customers are wanting a different product from what we've been producing. Therefore, it would seem as if we DO NOT have 90% committed as previously reported.”
Stanco can help to ameliorate the problem
Stanco's self interest is that WAK overcomes the current problems. Stanco is a major player in supplying feedstock to the textile-grade fibreglass subsector. Textile-grade fibreglass has various names, but I have chosen continuous-filament fibreglass as the most apt name, because keeping the high-speed production continuous is what makes K99F and K999F demand strict specifications. However, Stanco has customers in other kaolin market sectors, so it is in a position to help WAK by ordering other grades of K99 product – K99C, for example. WAK has not detailed the significance of the words, “The signing of an expanded offtake agreement with Stanco also provides revenue certainty as production increases at Wickepin.”
There are always two core issues with kaolin, chemical purity and particle size, and it is the latter that is WAK's problem. Alluvial kaolin has fine-grained advantage, but not the purity advantage, with carbonaceous matter and iron being the main problems that conduce to filament fracture when making continuous-filament fibreglass.
K99C is not a specification – within it there are a range of specifications driven by different optimisation goals. For sanitaryware, speedy casting is usually a goal, and that requires a coarse-grained kaolin with silica sand added to hasten drainage. If the joint efforts of the team of ceramics experts employed by WAK and Stanco's marketing arm push kaolin suitable of pressure-cast ceramics, that would give WAK cash flow at a critical stage of its growth. Usually with kaolin, it is the ore that determines the products, and K99C for pressure-cast ceramics is Wak's natural stomping ground. K999F only has a future on the basis that removing impurities to match WAK's ore costs competitors more than it costs WAK to fine-grind and sieve kaolin via dry-blow technology.
The blend used in sanitaryware typically includes 30% ball clay to provide plasticity and workability, 20% coarse kaolin, 30% feldspar and 20% quartz/silica. Coarse kaolin and silica sand effect hasty drainage. This suggests to me that WAK could export what I call near-ore to cover 40% of the total blend for sanitaryware. This matter of WAK exporting a near-ore is under discussion, and the idea is to export it in bulk via the Port of Bunbury, which may make obtaining road-transport permits easier to get. We shall hear more about this if negotiations are successful.
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