Altech Invitation Received to Construct HPA Plant in Germany
Altech Invitation Received to Construct HPA Plant in Germany
Perth, Sep 18, 2019 AEST (ABN Newswire) - Altech Chemicals Limited (ASX:ATC) (FRA:A3Y) is pleased to announce that it has received an invitation letter from the state government of Saxony, Germany, proposing that Altech consider the construction of a second high purity alumina (HPA) plant in the state.

In the letter, the state government of Saxony led by Minister-President, Mr Michael Kretschmer proposed to Altech that it should consider locating its next HPA plant in the industrial area of Schwarze Pumpe, which is located 100km north-east of Dresden, Saxony. As HPA is recognised as a critical component in the lithium-ion battery materials supply chain, an Altech HPA plant in Saxony would be well positioned to support the regions push to create a major electric vehicle battery industry, with a secure materials supply chain.

The German state of Saxony is located in the east of the country and borders both the Czech Republic and Poland. Saxony is the sixth most populous of Germany's sixteen states (population ~4 million) and tenth in terms of land area. The automobile industry has again become one of the pillars of Saxon industry, as it was in the early 20th century; the state hosts production sites for Volkswagen, BMW, Porsche and Daimler. Saxony is a leading engineer training ground and has excellent research facilities like the Fraunhofer Institute for Electronic Nano-systems, which is researching ceramic Nano technology in energy storage (HPA). Saxony's road network counts as the best developed in Germany and rail transport is one of the state's traditional strengths. Three efficient Elbe River inland ports have been developed connecting to the North German seaports and international maritime trade.

Altech's German advisers recently met with Minister-President of Saxony, Mr Michael Kretschmer to discuss its invitation. Based on these positive initial discussions, Altech intends to undertake further evaluation, which will include research on various government grants that the Company has been advised may be available in support of the establishment of a HPA plant in eastern Germany.

Whilst the Company remains focused on the close of funding and the construction of its Malaysian HPA plant, it also recognises the forecast significant deficit of HPA supply commencing in 2020 and the opportunity that this may present in terms of a 2nd HPA plant. Specifically, CRU Consulting in its most recent HPA market outlook report, identified a HPA 4N+ supply shortfall of approximately 20,000tpa in 2021 (equivalent to ~4 of Altech's 4,500tpa plants), which it forecast would expand to a shortfall of ~50,000tpa by 2028 (refer ASX Announcement of 3 July 2019 for further details). To this extent, the Company is of the view that there is merit in commencing early stage planning for additional future HPA plants, now. Considering the invitation letter from the Saxony state government and the strong signals from the European Union (EU) on its desire to foster a rapid transition to electric vehicles, and to establish a fully integrated materials supply chain to underpin the transition, the Company's current strategic thinking is for its next HPA plant to be located in Europe.

Altech recognises that Saxony would be well positioned to support Europe's push to create a major electric vehicle (EV) battery industry and associated materials supply chain. Stringent EU 2020 CO2 emission standards (95g per kilometre) are paving the way for the rapid displacement of internal combustion engine vehicles with EVs. To meet the new standards, European automotive manufacturers have announced plans for new EV model releases - both fully electric and/or hybrids. Also, a range of companies have recently committed to constructing or expanding battery cell plants in the EU, consequently by 2023/24 it is expected that EV battery manufacturing capacity will be 147GWh for the EU and global battery capacity is likely to be greater than 800GWh. Europe has correctly identified risks along the EV supply chain and has outlined the need for regional integration of the battery/EV production process. The current reliance on Asian suppliers has been identified as a concern. Importantly, the EU has a co-ordinated strategy - offering incentives to buyers, setting strict CO2 emission standards, revealing new grants and subsidies for battery companies to secure production facilities and raw materials within Europe. Volkswagen has publicly stated that it would like to see all of its EV manufacturing supply chain steps established in Europe.

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About Altech Chemicals Ltd

Altech Chemical Ltd ASX:ATCAltech Chemicals Limited (ASX:ATC) (FRA:A3Y) is aiming to become one of the world's leading suppliers of 99.99% (4N) high purity alumina (HPA) (Al2O3).

HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire. Synthetic sapphire is used in the manufacture of substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components. There is no substitute for HPA in the manufacture of synthetic sapphire.

Global HPA demand is approximately 25,315tpa (2016) and demand is growing at a compound annual growth rate (CAGR) of 16.7% (2016-2024), primarily driven by the growth in worldwide adoption of LEDs. As an energy efficient, longer lasting and lower operating cost form of lighting, LED lighting is replacing the traditional incandescent bulbs.



Iggy Tan
Managing Director
Altech Chemicals Limited
Tel: +61-8-6168-1555

Shane Volk
Company Secretary
Altech Chemicals Limited
Tel: +61-8-6168-1555

Investor Relations (Europe)
Kai Hoffmann
Soar Financial Partners
Tel: +49-69-175-548320

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