High-purity alumina producer Alpha HPA secures $225 million boost with NRF backing

Alpha HPA, the high-purity alumina producer, launched an institutional placement worth USD 225 million. This fund will directly aid in the construction and commercialisation of the institute, which also includes an additional USD 75 million as a pre-committed by the National Reconstruction Fund Corporation (NRF). There are certain pre-commitments that have not disclosed yet, which have been received by the shareholders of Alpha HPA, AustralianSuper and Orica.

The context of this project

HPA, a mineral deemed to be vital for sectors like semiconductors, pharmaceuticals and lithium-ion batteries. Out of the USD 210 million funds raised for the HPA First Project Stage 2, which is being set for the construction and commercialisation. Another USD 5 million has been invested in renewing the capacity of the HPA First Project Stage 1.

The Project Stage 2 facility construction in Gladstone is now expected to be completed either by late 2027 or by early 2028. The remaining USD 10 million will be given towards “general corporate purposes, including the cost of the offer”.

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High-purity alumina, an essential mineral for making semiconductors, pharmaceuticals, and lithium-ion batteries, is set to gain from the newly secured funds. A total of USD 210 million is earmarked for the construction and commercialisation of HPA First Project Stage 2, while another USD 5 million will go towards enhancing capacity at HPA First Project Stage 1. The Stage 2 facility in Gladstone is anticipated to be finished by late 2027 or early 2028. Additionally, the remaining USD 10 million will be allocated for general corporate needs, including the costs associated with the offer.

Pooling other investments

If the previous support from the government and the institutional placement are taken into consideration, the firm had already for the Project Stage 2 successfully generated a total of USD 590 million. Nonetheless, this investment will be shared towards a "refreshed economic model and re-baselining of the project". This is because, back in 2024, the feasibility study conducted showed an increase of 26 per cent in the expected total capital expenditure.

With loans given by the Northern Australia Infrastructure Facility and Export Finance Australia and the government's support, the HPA company had garnered an amount worth USD 497 million. The government support was further extended by the Queensland and federal governments for the QIC royalty critical minerals fund investment and grants. However, the firm is now in a position where it has halted trading so that the institutional placement can take place.

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Numbers that match the context & collaboration

The alumina operating company will issue 300 million new shares at a price of 75 cents each, with a discount of 11.2 per cent in comparison to the last closing price of 84.5 cents on January 28. The NRF’s commitment of USD 75 million translates to a pro-forma shareholding of 6.9 per cent.

Additionally, there will be a share purchase plan allowing eligible shareholders to apply for up to USD 30 thousand worth of new shares, priced at either the placement price or a 2 per cent discount off the five-day volume-weighted average price.

The firm shall also include the current eligible shareholders to take part in a non-underwritten Share Purchase Plan (SPP). This plan, along with the Placement, is part of the overall Offer or Capital Raising initiative.

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Collaboration to ramp up the project

Major companies like JP Morgan Securities Australia, Macquarie Capital and Bell Potter Securities, for this project, are deemed to be acting as the joint lead manager, underwriters and bookrunners for the placement. The record date for the share purchase plan has been set to January 28. This will open on February 6 and will be closed on February 20.

Leaders' viewpoint

Alpha HPA managing director Rob Williamson said, "We are pleased to welcome NRFC as a cornerstone investor – their investment is a strong endorsement of the Company’s strategic importance as the largest single-site manufacturer of HPA globally. We look forward to continuing Stage 2 project execution and moving closer to establishing Australia’s first, sovereign, large-scale, commercial capability to manufacture high-purity aluminas and related products to support technology growth sectors driving the global energy transition."

On the other hand, NRFC chief executive David Gall commented, "Alpha’s unique IP makes lower temperature processing possible. Coupled with the project’s use of 100 per cent renewable electricity, this means it produces around 70 per cent less emissions than current methods of producing HPA. The NRFC is delighted to be supporting an Australian company that is commercialising breakthrough IP to create products that the world and Australia will increasingly need."

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