CRU Consulting supports Altech's high purity alumina investment

14 August 2019 Consultancy.com.au

Altech Chemicals, a Perth-based manufacturer of high purity alumina, has commissioned CRU Consulting to conduct a detailed study on the market outlook for high purity alumina.

High purity alumina is used mainly to manufacture synthetic sapphire, a super-hard material used as a substrate in LED and semi-conductor production. Around half of all high purity alumina end up in the production of LED lights, with 15% going to semiconductors and 10% applied in the production of lithium ion batteries. The remainder of high purity alumina is used as a raw material in sectors such as healthcare, aviation and aerospace and industrial manufacturing.

The use of high purity alumina is booming. Estimates from five different leading market analysts all believe that demand for the material will grow by a compound annual growth rate of over 15% in the period up to 2023, with one estimate even predicting a 29% growth rate. Key drivers include the massive global substitution of incandescent bulbs by LED lighting, the steep growth of electric vehicles (which need lithium ion batteries) and the continuously growing need for more and increasingly powerful semiconductors (used for example in robotics and for scratch-resistant glass in smartphones).

High purity alumina has two common forms of purity: 4N and 5N purity. 4N purity represents a purity level of 99.99%, while 5N takes purity one level higher: 99.999% purity.

The production of high purity alumina can follow a number of routes, such as using aluminium metal to produce high purity alumina, or kaolin clay, or other highly processed feedstock materials. One of Australia’s players in the high purity alumina landscape, Altech Chemicals, has embarked on the ambition to become a leading player in the sector.

The company is developing plans to launch a high purity alumina plant at the Tanjung Langsat Industrial Complex in Johor, Malaysia, which will – once running at full capacity – produce 4,500 tonnes of high purity alumina per year. The plant will be based on a kaolin clay process, which will be sourced from the company’s 100%-owned kaolin deposit at Meckering, Western Australia.

Financing its high purity alumina plant in Malaysia

To realise its goal, Altech Chemicals is raising financing, and as part of the process, the firm brought experts from CRU Consulting on board to support the operation’s business case. Leveraging its approach, Altech Chemicals believes that it can manufacture high purity alumina at “considerably lower” cost compared to established producers in the market. Combined with a rosy backdrop of growing demand and rising prices for high purity alumina, the Australian company is approaching investors with a clear message: invest in our lucrative outlook.

CRU Consulting provided the market outlook for high purity alumina. The firm’s researchers found that the unconstrained demand forecast for 4N+ (99.99% or greater) high purity alumina will rise from today’s 19,000 tonnes per annum to 272,000 tonnes by 2028. The demand for high purity alumina in powder form, used for lithium ion battery separators, could reach 187,000 tonnes by that year, while high purity alumina in the pellet/bead form, used for LED, could reach 85,000 tonnes per year.

However, in their analysis, the researchers do have a word of caution. Since there is no real substitute for synthetic sapphire, and production of high purity alumina is likely to not keep pace with demand, a share of the demand will not be met. “Some growth will likely be constrained by supply limitations,” said Toby Green, a senior consultant at CRU Consulting in Australia.

Iggy Tan, Managing Director at Altech Chemicals, described the study by the consultants as “excellent market report”, and added that the main findings underpins financial discussions with a syndicate of banks that are considering investing in the firm’s plant in Malaysia.

In January this year, Altech Chemicals confirmed that it has received all necessary nods from the Malaysian state, and preparatory works for the plant have begun. The lion’s share of the US$280 million needed for the first phase of construction has been funded, with the Australian chemicals company now seeking funds for the second phase.