Alumina News - Project

Altech appoints SMS group as EPC contractor for Malaysian HPA plant

Altech Chemicals Press Release

Altech Chemicals Limited has appointed German engineering firm SMS group GmbH (SMS) as the engineering, procurement and construction (EPC) contractor for its proposed Malaysian high purity alumina (HPA) plant.

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A key condition of Altech’s application for German export credit project finance cover is the provision of a throughput guarantee for the HPA plant by the EPC contractor. The previously envisaged EPC contractor was unable to provide this guarantee.

SMS, as the incoming EPC contractor has proposed the following to Altech:

1. Fixed price turnkey EPC contract (existing);
2. Completion and cost guarantees (existing);
3. Process guarantee including final product quality (additional);
4. Throughput guarantee (additional);
5. Commissioning and start up responsibility (additional);
6. Initial subscription of US$100,000 of Altech shares (additional); and
7. Project equity or subordinated debt support at project financial close (additional).

SMS has proposed a clear and concise guarantee to Altech for HPA plant throughput. In addition, having prior experience with the kaolin-HPA hydrogen chloride processing technique that Altech will use, SMS has proposed process and final product guarantees and this will significantly strengthen Altech’s export credit project finance cover application. The additional guarantees proposed by SMS are extremely positive outcomes that significantly de-risk the project.

SMS has also agreed to an initial US$100,000 subscription of Altech shares upon formal execution of contract documentation, and has proposed an equity investment or subordinate debt support for Altech at project financial close.

SMS will continue with finalising the project capital cost estimation, which is expected in the coming months following the transition of all project information. SMS is a large privately owned German engineering company with an annual turnover of approximately 3.3 billion Euros. SMS builds turnkey solutions based on innovative plant technology, complete with buildings, infrastructure and auxiliary equipment for processing plants such as Altech’s proposed HPA plant.

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Commenting on the appointment of SMS as EPC contractor, Altech managing director Iggy Tan said, “The appointment of SMS as EPC contractor for the proposed Malaysian HPA plant, although only recently envisaged, will be a huge positive for the project. Not only does SMS have prior experience with the Company’s kaolin to HPA hydrogen chloride acid leaching process, it has demonstrated its confidence in Altech and the process with an initial US$100,000 equity investment pledge and project equity or subordinated debt support upon financial close. SMS also has extensive experience with German ECA cover and is amongst the top three users of this facility in Germany.”

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