Altech Chemicals signs agreement with EPC contractor SMS Group for stage 1 construction of HPA plant

Altech Chemicals Ltd has signed the final agreement to construct stage I of its high purity alumina (HPA) plant in Johor, Malaysia with its EPC contractor SMS Group GmbH (SMS) of Germany.

The scope of work is valued at around $10 million and includes bulk earthworks, foundation piling and the construction of retaining walls. The agreement also covers construction of underground stormwater/process discharge tanks and the site electrical sub-station structure and a maintenance workshop.

The workshop will be used as construction site offices during stage II of the HPA plant construction process. The plant will use the kaolin deposit at Meckering in Western Australia as raw materials and produce HPA directly from the clay. Altech has completed a Final Investment Decision Study for the construction of a 4,500 tonnes per annum plant at the Tanjung Langsat Industrial Complex, Johor.

Most of the construction works in stage I will be done under the US$280 million lump-sum, fixed-price EPC contract awarded to SMS. Stage I will be funded by equity.  Altech has decided on equity funding for stage I construction to maintain project momentum and the works will be conducted in parallel with project finance close. The company is in the process of securing project financing.

HPA is a high-value product with growing demand as it is the critical ingredient required for the production of synthetic sapphire. Synthetic sapphire is used to manufacture substrates for LED lights, semiconductor wafers for electronics, and scratch-resistant sapphire glass used for wristwatches, optical windows and smartphones.

Global HPA demand stood at 25,315 tonnes in 2016 and is growing at a compound annual growth rate of 16.7%, primarily driven by growing use in LEDs.