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Altech Chemicals' Alumina Product In Big Demand

Altech Chemicals (ASX:ATC) expects Chinese demand for high purity alumina (HPA) - for use in lithium-ion battery separators - to be nearly 4,000 tonnes per annum by the year 2020.

The exact figure - 3,936tpa - is also roughly the annual production capacity of Altech's proposed new HPA plant at Johor in Malaysia.

The expected Chinese demand in 2020 is more than 10 times the 332tpa forecast demand in 2015 for HPA's use in li-ion batteries.

These numbers have been compiled by research done by Martin Ma, who was recently appointed by Altech as the company's sales and marketing manager in China. Ma's data is supported by the Chinese government's own research on growth in electric powered vehicles (EVs).

HPA is used to increase the battery's discharge rates, lower self-discharge and lengthen the battery lifecycle and li-ion battery producers have reported battery usage of about 120g of HPA per kilowatt hour.

Importantly, the forecast demand is for China only and does not take into account Korea (the world's second largest li-ion battery maker) Japan, Taiwan or Tesla's planned Gigafactory in Nevada, which is scheduled to come online next year.

Altech said the global push for electric vehicles and energy storage was becoming an increasing market trend for li-ion batteries.

"Today, the large scale adoption of EVs is still nascent; however, adoption is forecast to grow strongly. In support of accelerating EV adoption worldwide, government ownership policies and initiatives are being implemented, which aim to have 20 million EVs, including hybrid vehicles, on the road by 2020.

"Also, while not yet a large demand driver, growth in li-ion battery demand from the electricity storage (solar energy) market is expected to exceed 30% per annum."

The battery separator in which HPA is used has a simple yet critical function. The separator - a thin porous membrane - has the primary function of preventing physical contact between the anode and cathode, while facilitating transport within the cell.

The most commercially available li-ion separators are typically made of polyolefin. But there has been a general migration towards the production of large-format, li-ion batteries for transportation and utility storage. With these larger format batteries, a fast-growing method to improve the thermal and mechanical stability of the separators is to use HPA or ceramic composite-base materials, which offer superior performance.

Altech said it believed Tesla's entry into the li-ion market would impact demand for HPA.

The projected cost to build the facility was about US$5 billion and Tesla has said it would build 500,000 electric cars per annum by 2020 and hitting a scale that will drive down the cost of its 60kWh battery pack by 30% to about $10,000.

"The project aims to disrupt battery costs to impact the distributed storage industry. Tesla's Gigafactory will sprawl across 500 to 1000 acres of land situated near highways and rail, with space for a few hundred megawatts of solar panels and some wind turbines," Altech said.

Analysis

Altech Chemicals is aiming to become one of the world's leading suppliers of 99.99% HPA.

HPA is a high-value product because it is the major source material for scratch-resistant artificial sapphire glass. Sapphire glass is used to produce a range of high-performance electronic applications such as LEDs, semi-conductors, phosphor display screens, as well as new emerging products such as smartphones and tablet devices.

The global HPA market is about 19,040tpa (2014) and is expected to at least double over the coming decade.

Current HPA producers use an expensive and highly processed feedstock material such as aluminium metal to produce HPA. Altech produces 4N HPA directly from an ore feedstock, aluminous clay, from its Meckering deposit in Western Australia. The company is now advancing a bankable feasibility study to develop a full-scale 4,000tpa HPA production facility.

The Altech process employs conventional and proven off-the-shelf plant and technology to extract HPA from its low-cost and low-impurity aluminous clay feedstock, which results in lower operating costs.

Altech is focused on creating a high-margin product to meet the growing global demand for the next generation of high-performance technologies.

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