Altech Chemicals inches towards German credit support for HPA

Altech Chemicals has taken a step closer to clinching the support of an export credit insurance scheme which could cover most of the total capital cost of the company’s high-purity alumina (HPA) project.

Altech has received a letter of interest from the administrator of Germany’s export credit agency (ECA) confirming that the group would, in principle, support the project, which encompasses kaolin mining in Western Australia and a proposed HPA processing plant in Malaysia.

ECA debt is expected to cover about US$40 million of the project’s total capital expenditure of about US$77 million. After including an expected additional senior debt requirement of about US$15 million, total project debt financing would be around US$55 million.

Interest rates charged by lenders on debt that is supported by ECA cover is typically at attractive conditions, as the repayment of the debt is insured, also long tenure is usually available in accordance with Organisation of Economic Cooperation and Development guidelines.

Headway in establishing ECA cover for the HPA project follows closely on execution of a mandate with Germany’s KfW IPEX-Bank, an export and project finance specialist with experience in the debt financing of worldwide mining and chemical projects.

This coverage is considered possible because the majority of the plant and equipment will be sourced from European Union manufacturers and because German group M+W is the appointed engineering, procurement and construction contractor.

The next step in securing ECA cover is the submission of a formal application accompanied by a detailed project information memorandum and various supporting documents.

Detailed project due diligence will follow and will be coordinated by the Altech’s mandated bank and its Germany-based project financing consultants.

Project progress

The recent advances in obtaining German government export guarantees have coincided with other practical progress in realising and optimising the HPA project.

Most recently, this momentum has included an expansion of the kaolin mining operations in WA with the grant of a new exploration licence. The licence covers an area of approximately 480 square kilometres, is on freehold agricultural land and contains an inferred kaolin resource of 85 million tonnes at 85.1% brightness.

The area known as the Kerrigan project is proximal to the Hyden to Lake Grace railway line which connects to the port city of Albany.

Also, Altech has planned further value-adding cost reductions for the project by relocating the project’s beneficiation plant adjacent to the HPA plant in Malaysia, reducing capital costs associated with feedstock transport and creating process circuit synergies.

The estimated lower operating costs for the Malaysian beneficiation plant will more than offset the additional freight associated with transporting un-beneficiated kaolin from WA to Malaysia.

Altech also positioned itself to take in up to A$3 million in cash plus royalties by granting mining rights in October for its kaolin operations in WA.