Altech Chemicals Limited announced the outstanding results from a Preliminary Feasibility Study (PFS) for the development of a 10,000tpa silicon/graphite alumina coating plant, in Saxony, Germany. The plant would be constructed by Altech Industries Germany GmbH (AIG), (ownership: 75% Altech, 25% Frankfurt stock exchange listed Altech Advanced Materials AG (AAM)), and would produce high capacity silicon/graphite battery anode materials "Silumina AnodesTM" under exclusive license from Altech. Silumina AnodesTM products are targeted to supply the burgeoning European electric vehicle market.

With a capital investment of $95 million, the Company estimates a project net present value of $507 million (NPV8), with net cash of $63 million per annum generated from operations. The internal rate of return is estimated at 40%, with investment capital paid back in approximately 3.1 years. Total annual revenue at the 10,000tpa full rate of production is estimated $185 million per annum.

Tesla, a global leader in the electric vehicle and lithium-ion battery industry, has declared that the required step change to increase lithium-ion battery energy density and reduce costs is to introduce silicon in battery anodes, as silicon has ten times the energy retention capacity compared to graphite. Silicon metal has been identified as the most promising anode material for the next generation of lithium-ion batteries. However, until now, silicon was unable to be used in commercial lithium-ion batteries due to two critical drawbacks.

Firstly, silicon particles expand by up to 300% in volume during battery charge, causing particle swelling, fracturing and ultimately battery failure. The second challenge is that silicon deactivates a high percentage of the lithium ions in a battery. Lithium ions are rendered inactive by the silicon, immediately reducing battery performance and life.

Industry has been in a race to crack the silicon barrier. Through in-house research and development, Altech announced late last year that it has cracked the "silicon code" and successfully achieved 30% higher energy retention in a lithium-ion battery, with improved cyclability and battery life. Higher density batteries result in smaller, lighter batteries and substantially less greenhouse gases, and are destined for the EV market.

To achieve its breakthrough, Altech successfully combined silicon particles that had been treated with its innovative and patented alumina coating technology, with alumina coated battery grade graphite, producing the Silumina AnodesTM product. So far, the major drawbacks outlined above for using silicon in lithium-ion battery anodes, have been substantially overcome with Altech's Silumina AnodesTM product. The European graphite and silicon feedstock supply partners for AIG's plant in Saxony will be SGL Carbon GmbH (SGL) and Ferroglobe Innovation S.L. (Ferroglobe), respectively.

The project has already received green accreditation from the independent Norwegian Centre of International Climate and Environmental Research (CICERO). To support the development, AIG has commenced construction of a pilot plant in Germany, at a location adjacent to the proposed site of 10,000tpa plant. Product from the pilot plant will be provided to potential buyers, such as automakers, to fast-track the Silumina AnodesTM product qualification process.

AIG already has non-disclosure agreements (NDAs) in place with two German automakers, as well as with a European based lithium-ion battery manufacturing company.