Iggy Tan was ahead of his time when he set up Galaxy Resources (GXY) to prosper from the lithium-ion battery boom.
Galaxy is now a $1.2 billion company. But when Iggy left the company in June 2013, the boom had not arrived as expected and times were tough for the company and for Iggy himself. But since 2014 Iggy has been nurturing his new baby, Altech Chemicals (ATC). And like his ahead-of-the-curve work in the lithium space with Galaxy, Iggy is now doing the same for Altech in the fast-growing high-purity alumina (HPA) space.
HPA is not a big-tonnage market, with global demand of about 25,000 tonnes in 2016. But like lithium, it is a high-growth market, with industry forecasters predicting a 17% compound annual growth rate to more than 86,000 tonnes by 2024.
There are some good reasons for that which go to newer and growing applications for HPA. The stuff is used to make clear synthetic sapphire glass (natural sapphires are coloured by impurities) for use in LED lights, and the scratch-resistant glass used in Smartphone screens and lenses.
And given Iggy’s trail-blazing background in lithium, it’s nice to know another fast-growing use of HPA is as the separator between the anode and cathode in lithium ion batteries. It stops them catching fire, which is something Samsung knows all about.
From that it can be taken that HPA is also a high-value, high-margin business. The 99.99% purity HPA that Altech plans to produce (it is missing the impurities found in 99.5% smelter grade alumina (SGA) used to make aluminium) from its proposed integrated operation involving a kaolin mine at Meckering, some 130km from Fremantle, and a processing plant in Malaysia, currently fetches $US27,000 a tonne. SGA sells for $US400 a tonne on a good day.
So it doesn’t take much production of the stuff to have meaningful financial metrics. Altech is shooting for annual production of 4,500 tonnes of HPA, an amount that the market’s 17% CAGR should comfortably accommodate without any price destabilisation.
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