Altech Batteries Limited · ASX:ATC
Altech Batteries — Altech Chemicals — Investor Presentation (July 2019)
57 slides from Altech Batteries's investor presentation, July 2019
Slide 1: General Meeting
Altech Chemicals Limited ASX: ATC FRA:A3Y Youbisheng Green Paper AG General Meeting Iggy Tan Managing Director
Slide 2: 4,500 tpa High Purity Alumina Plant
4,500 tpa High Purity Alumina Plant ● Sapphire substrates ● LED growing at 16% CAGR ● Massive electricity savings
Slide 3: What is HPA?
• Sapphire gemstone • Purified alumina (Al2O3) • 99.99% (4N) purity or greater • Smelter Grade Alumina (SGA) ~ 99.5% Bayer Process uses sodium hydroxide What is HPA? (NaOH) • Sodium impurity is a problem for sapphire and lithium batteries
Slide 4: High price for purity
Smelter Grade High Purity High Purity High Purity High price Alumina SGA 99.5% Alumina HPA 99.9% (3N) Alumina HPA 99.99% (4N) Alumina HPA 99.999% (5N) for purity US$400 per t US$6,000 per t US$20,000 per t >US$50,000 per t US$9,000 per t US$40,000 per t Our Target Business
Slide 5: LEDs & Lithium-ion Batteries
LEDs & LITHIUM-ION BATTERIES Sapphire Furnace (2,000 oC) Sapphire Crystal Boule Sapphire Wafer LEDs Nano Powder Separator Coatings LITHIUM ION BATTERIES
Slide 6: LED Expansions
LED Expansions Xiamen Changelight Purchases AIXTRON MOGVD Technology to Expands ROY LED Production
Slide 7: Sapphire substrates, LED growth, electricity savings
● Sapphire substrates ● LED growing at 16% CAGR ● Massive electricity savings
Slide 8: LEDs & Lithium-ion Batteries
LEDs & LITHIUM-ION BATTERIES Sapphire Furnace (2,000 oC) Sapphire Crystal Boule Sapphire Wafer LEDs Nano Powder Separator Coatings LITHIUM ION BATTERIES
Slide 9: Battery cost and energy density
Battery Energy Density 1000 Battery Cost (US$/kWh) (LHS) 500 Battery Energy Density (Wh/l) Battery Energy Density (Wh/l) 800 400 Battery Cost (US$/kWh) 600 300 400 200 200 100 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e 2022e Battery costs are reducing due to incre
Slide 10: Battery Energy Density vs Temp
Battery Energy Density vs Temp 300 250 Specific Energy (Wh/kg) 200 150 100 Higher Operating Temperatures 50 0 LFP LMO LCO NMC NCA Cathode Evolution Cathode changes – higher operating temperatures
Slide 11: HPA Coated Separators
Normal Polymer Separators Polypropylene (PP) 155 oC HPA <135 oC Polyethylene (PE) 135 oC required Polypropylene (PP) 155 oC for higher temps HPA layer >200 oC Polymer membrane HPA Coated Separators (HPACS)
Slide 12: W-Scope Separator Sales
60 W Scope Separator Sales 50 51% HPA % of W-Scope Sales 40 39% 30 31% 30% 34% 35% Coated 20 Separators 10 12% 13% 0 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Japanese separator manufacturer reports 40% HPA coated separators 12% only 24 months ago
Slide 13: Capex Plans of Battery Manufacturers
Capex Plans of Battery Manufacturers Korea - 50-70 GWh by 2020 China 32 GWh by 2023 LG Chem Korea - 20 GWh by 2020 Japan - JV with Toyota 50x capacity by 2020 China - 50 GWh by 2020 Korea - 30 GWh by 2020 Sweden - Spending US$4 B to achieve 32 GWh
Slide 14: Demand for HPA
300,000 250,000 HPA Demand Forecast tpa 200,000 Demand 150,000 for HPA 100,000 50,000 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 • 30% CAGR demand growth • 272,000 tpa. by 2028 Source: CRU Global HPA Outlook 2019
Slide 15: CRU Latest Forecast
• CRU upgraded previous forecast to 272,000 tpa by 2028 • 30% CAGR demand growth 2028 • Future LED market - will require higher quality • LIB separators demand 187,000 tpa by 2028 CRU Latest • LEDs demand forecast 85,000 tpa by 2028 Forecast • Significant supply deficit
Slide 16: CRU warns of significant supply deficit
20,000 Supply Deficit Analysis 0 -20,000 CRU warns -40,000 of significant -60,000 supply deficit 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Mid-term - Market balance Long-term - Supply gap • About 20,000 tpa by 2021 • Peaking in 2028 by 50,000 tpa • New entrants 3-4 years
Slide 17: Sapphire Glass Scratch Test
Sapphire Glass Scratch Test
Slide 18: Current HPA Producers
• HPA producers – Chemical companies China (3), Japan (2), South Africa (1) France (1) Sumitomo Chemicals (Japan) 3,020 Huantou, 800 Others (15), 3,570 Sasol (South Africa) 1,800 Current HPA Dailian Rall, 600 Producers Nippon Light Metal, 1,100 Baikowski (France) Hebei Pengda (China) 1,200 3,000 Xua
Slide 19: Altech's Differentiation
Altech’s Differentiation Current HPA Producers Alumina Alumina Aluminium Refinery Smelter Dissolution Bauxite Smelter Grade Alumina Aluminium Metal 99.99% (4N) 99.5% ~US$3,000 per tonne HPA ALTECH HPA PLANT One Single Process Step Kaolin 99.99% (4N) (aluminous clay) HPA
Slide 20: Low-impurity Kaolin Feedstock
• Very low iron (Fe) due to weathering • 12.7Mt JORC Mineral Resources^ (250 yrs) • Measured Resources 1.5Mt @ 30% Al2O3 • Deposit in Western Australia Bauxite Low-impurity Altech % Darling Kaolin * Kaolin Feedstock Range* Al2O3 34.5 30.0 SiO2 21.5 57.9 Fe2O3 21.2 0.4 TiO2 2.00 0.7 K2 O 0.24 0.2 NaO
Slide 21: Meckering Kaolin Deposit in West Aust
• Mining approval granted • Works approval granted • Simple free dig mining Meckering • Campaign mining, 2 months - 3 years feed Kaolin Deposit • Then just sea container loading operation in West Aust • Fremantle to Johor easy shipping
Slide 22: HPA Plant to be in Johor, Malaysia
• Chemical-zoned industrial park • 60% lower operating costs • HCl plant nearby • Services, natural gas, electricity, water HPA Plant to • Access to 17th largest container port be in Johor, • 5-10 year corporate tax free Malaysia • No radioactive waste – chemical park
Slide 23: HPA plant site layout
HCl Plant Leach & Neutralisation Fine Sand Kaolin Calcination Roasting & Calcination Kaolin Kaolin Beneficiation Receival HPA Finishing Plant Final Product Administration Control Room Lab TNB Substation Main Station Gatehouse Car Park Gat e
Slide 24: Altech's Patented HPA Process: Quartz Removal
Altech’s Patented HPA Process ROM Campaign Mining Sea Container To Fremantle MECKERING Shipping Sea Container JOHOR Screening Quartz Removal Drum Scrubber Quartz Oversize
Slide 25: Altech's Patented HPA Process: Acid Leach
Altech’s Patented HPA Process Flash Dryer Hydrochloric Acid Filter Cooler Calciner Milling Screening 700 C Filter Acid Leach Meta Kaolin - Acid Leach Silica
Slide 26: Altech's Patented HPA Process: AlCl3 Purification
Altech’s Patented HPA Process HCl Gas Stage 1 Crystalisation AlCl3 Purification Centrifuge Al Cl3 Crystals HCl Gas HCl Gas water water Centrifuge Centrifuge Al Cl3 Al Cl3 Stage 3 Polishing Stage 2 Crystalisation Filter Crystalisation HCl Wash HCl Wash
Slide 27: Altech's Patented HPA Process: Roasting & Final Product
Altech’s Patented HPA Process Roasting & Final 99.99% Cooler Jet Mill Spray Product HPA Battery Grade Option Dryer Beads 1600 C Packaging Cooler Tunnel Kiln Pelletiser Feed Tank HCl Plant Quartz Oversize HCl Alpha Al2O3 1250 C 700 C Screen HX Cooler Calciner Roaster Bead Mill Wash
Slide 28: Altech's Patented HPA Process
Altech’s Patented HPA Process ROM Campaign Mining Sea Container To Fremantle MECKERING Shipping Sea Container Meta Kaolin Flash JOHOR Dryer 700 C Hydrochloric Acid Filter Cooler Screening Calciner Milling HCl Gas Polishing Screening Filter Filter Drum Scrubber > 0.3mm Acid Leach Stage 1 Crystalisati
Slide 29: Established Proven Chemistry
• Chemistry established in 1900s by Swiss • US Gov & Alcoa developed further 1980’s • No demand for HPA in 1980’s • New HPA growth demand (LEDs LIBs) Established • Altech applied open chemistry to Meckering Proven • Very successful, disruptive, lowest cost Chemistry • One patent granted, 8 pending
Slide 30: Bottom Quartile for Op Costs
• Competitors 1. We own our feedstock 2. Main reactant HCl re-used 3. Plant in low cost country (Malaysia) Bottom Quartile Altech for Op Costs Source: Persistence Market Research “High Purity Alumina Market – Global Industry Analysis and Forecast 2016-2024”
Slide 31: Mitsubishi 10 year off-take
• Off-take sales agreement with Mitsubishi • First 10 years of HPA operations • Secures sales for HPA plant production Mitsubishi • Exclusive global distributor • Experienced with HPA 10 year • Strategic priority: lithium-ion batteries off-take
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Slide 33: Lump Sum Turn Key Contract
• SMS group German EPC contractor • Lump sum turn key contract • Completion and cost risk • Throughput guarantee Lump Sum • Process & quality guarantee Turn Key • Third largest user of ECA finance Contract • Committed US$ 15 mil equity 33
Slide 34: Aiming to Under-promise Over-deliver
• Lots of “fat” in design assumptions • Using 79% instead 90% Utilisation • Using 60% instead 90% Recovery Aiming to • Using 30% instead 34% head grade Under-promise • 3 Yr ramp up instead of 2 Yr Over-deliver • Possibility of 6,000 tpa 34
Slide 35: Economics Equity Model
• Pre-tax NPV7.5 US$ 505 million • Internal Rate of Return (IRR) 22% • Payback (full rate) 3.9 years • EBITDA US$ 76 million p.a. Economics • Capital cost US$ 298 million * • Production Costs - US$ 8.55 /kg Equity Model • LT Sale Price - US$ 26.9/kg • Gross Margin – 68% * Pre Finance Costs 35
Slide 36: Altech Chemicals Sdn Bhd groundbreaking ceremony
te Altech Chemicals Sdn Bhd — \ GRAND ee CEREMONY |] 8" auc 2018
Slide 37: Slide 37
Slide 38: Altech Growth Performance
$- $100.0 $30.0 $60.0 $90.0 $10.0 $20.0 $40.0 $50.0 $70.0 $80.0 • • • • • Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 No debt Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Cash - $8 m +$4m to come Feb-17 Mar-17 Mar Cap $80m - 706 m shar
Slide 39: Quality Shareholders
Quality Shareholders D Balaton/Delphi 13% Melewer Group 9% SMS Group Others 8% 67% Board & Mge 3%
Slide 40: Sapphire substrates, LED growth, electricity savings
● Sapphire substrates ● LED growing at 16% CAGR ● Massive electricity savings
Slide 41: Debt Funding Successful
• Debt funding with KfW IPEX-Bank • Total debt of US$ 190 million Debt • US$ 170 million export credit finance • 50% of plant – German suppliers Funding • Low interest, long tenure Successful • Best debt in the world
Slide 42: Advancing Final Stage Funding
Three work streams 1) Subordinated mezzanine debt • Macquarie Term sheet of US$90m Proceeding to internal 2) Equity work stream approval Advancing • Lead - Petra Capital Final Stage 3) Possible JV Partner Funding • Partial project sell down • Various parties in dataroom 42
Slide 43: Macquarie Mezzanine Debt DD Status
• Indicative non binding term sheet of US$90m • Technical due diligence – Worley Parson appointed • 5 months of technical due diligence Macquarie • Positive technical report – no fatal flaws • Internal financial modelling done Mezzanine Debt • Completed market due diligence by CRU DD Status • Legal
Slide 44: Stage 1 & 2 Construction underway
Stage 1 & 2 Construction underway
Slide 45: Stage 1 & 2 Construction underway
Stage 1 & 2 Construction underway
Slide 46: Stage 1 & 2 Construction underway
Stage 1 & 2 Construction underway
Slide 47: Stage 1 & 2 Construction underway
Stage 1 & 2 Construction underway
Slide 48: Global Quality Partners
Global Quality Partners • Australian Company • Malaysian HPA plant • Kaolin mine • Major shareholder • Aust Technology • Tax incentives Australia Malaysia Germany Japan • German debt (KfW) • EPC contract (SMS) • Mitsubishi offtake • Frankfurt dual listing • Major markets
Slide 49: German Project Equity Strategy
German Project Equity Strategy
Slide 50: Europe Battery Industry
• Germany, France creation of a major battery industry in Europe • By 2024 capacity will be 147 GWh • Stringent 2020 EU CO2 emission Europe standards (95g/km) Battery • Push to electric vehicles (EVs) by European car manufacturers Industry • Less reliant on Asia • Volkswagen - all supply chain in Eu
Slide 51: German Project Equity Strategy
• Acquire 29% Youbisheng Green Paper AG (YAG) Frankfurt listed • Name change to Altech Advanced Materials AG • Sell right for YAG to acquire up to 49% of HPA German project for US$100m Project Equity • Larger pool of European institutional investors • Enhanced project valuation Strategy • Less dilut
Slide 52: US$100m Valuation
• Altech (51%) has invested A$60m to date • 5 year development effort • 250 year mine life deposit • Intellectual property, process technology 49% • Brought Mitsubishi 10 year off take US$100m • Established KFW US$190m senior debt Valuation • Fixed price EPC contract with SMS • Mezzanine debt term s
Slide 53: Proposed JV Structure
Proposed JV Structure Australia Altech Chemicals Limited (ASX:ATC) 29% Germany 49% 51% Altech Advanced Materials (AAM) (DAX: YB1A) Australia Altech Chemicals Australia Pty Ltd 100% 100% Australia Malaysia Altech Altech Meckering Pty Ltd Chemicals Sdn Bhd Kaolin Johor HPA Deposit Plant
Slide 54: Transaction Details
• Non-refundable fee of €500,000 in cash • Right executed before 1 Jan 2021 • Min 10% direct HPA project interest (US$20m) • Invest Altech parent shares at 15% discount Transaction • Altech will buy back at end year 6 for 15% pa return Details • Minimum US$231m at end year 6 • Altech can buy back ea
Slide 55: Conditions Precedent
• Acquisition of 29% of YAG shares • Satisfactory DD outcome by YAG and Altech • Approval of Altech board of directors • Regulatory approvals Conditions • YAG change of company name to Altech Advanced Materials AG (AAM) Precedent • YAG structure to allow €70 m raise • Appointment Altech nominees YAG
Slide 56: Right Place Right Time Right Feedstock
Right Place Right Time Right Feedstock Right Technology Thank you
Slide 57: Forward-looking Statements
Forward-looking Statements This announcement contains forward-looking statements which are identified by words such as ‘anticipates’, ‘forecasts’, ‘may’, ‘will’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, ‘plan’ or ‘intends’ and other similar words that involve risks and uncertainties.