No matter how excited we are about our high purity alumina (HPA) project, which will see us take our alumina-rich kaolin deposit and turn it into 4,000 tonnes per year of 99.99% (4N) pure alumina at our proposed plant in Malaysia – there is little point to our enthusiasm if we cannot sell the product.
That is especially true in a world where actual and potential applications of HPA are expanding at an amazing rate.
So we are thrilled that Mitsubishi has committed to buying all the HPA we produce from our Malaysian plant for the first 10 years.
The off-take sales agreement with Mitsubishi will commence on the date of first shipment of our final HPA product. Under the agreement, Mitsubishi will take the following quantities annually at prevailing market prices:
Forecast Contracted
Production Sales
Year 1 2,700 tonnes 2,700 tonnes
Year 2 3,000 tonnes 3,000 tonnes
Year 3 3,400 tonnes 3,400 tonnes
Year 4 3,800 tonnes 3,800 tonnes
Years 5– 10 4,000 tonnes 4,000 tonnes
The agreement follows a previous deal with Mitsubishi for the sales and distribution of our HPA to Japan only. Then after further discussions Mitsubishi was appointed exclusive buyer and global distributor for all of Altech’s HPA production.
Signing an exclusive off-take agreement such as this has two major implications.
First, it’s a strong vote of confidence from Mitsubishi in Altech, our project and the team working to bring it to fruition. Mitsubishi is Japan's leading general trading company, with more than 200 operational bases in about 90 countries worldwide. Mitsubishi has long-term relationships with customers from around the world in virtually every industry, including energy, metals, machinery, chemicals, food and general merchandise.
We believe we will become the world’s largest – and lowest-cost – producer of HPA; Mitsubishi’s commitment is an enormous vote of confidence from Japan’s biggest trading company.
The second major implication is that this is a big step towards securing project financing. A signed purchase commitment for 100% of production in the first 10 years negates a key commercial risk of the project.
We can now demonstrate to banks and other potential project financiers that every tonne of HPA that we produce for the first 10 years will be purchased.
In the language of project finance, this is a significant de-risking milestone for Altech as it gives comfort to potential project financiers.
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