Today, speciality battery technology company Altech Batteries [ASX:ATC] released its Definitive Feasibility Study (DFS).
The study outlines its new plan for its German plant to simplify its final product and boost its production eightfold.
The DFS now outlines an 8,000tpa of their specialised anode battery material. We’ll get into later what this product is and does.
Investors were enthused by the production boost, which improved the bottom line, and they bought heavily today.
Shares are up by 12.50%, trading at $0.072 per share. Today’s rally recovers some of the losses seen by Altech, down by -14.10% in the past 12 months after two capital raises.
So what does this plant make, and is it worth investors taking a look?
Source: TradingView
Cracking the ‘silicon code’
Altechs plant had initially planned to produce ‘Silumina Anodes’, a new type of anode material for batteries.
An anode is the negative section of a battery and, along with the positive cathode, makes up around half of the weight of a battery.
The graphite in these two components takes up most of the volume of a typical lithium-ion battery.
Their new plant aims to introduce new materials into the anode to make a more energy-dense battery.
The obvious choice for many has been silicone. Tesla has long touted silicone as the great battery replacer, but technical challenges have kept it out of our cars.
Silicone expands and contracts 300% on every charge and discharge, leading to dangerous cracking and loss of battery performance.
Altech said their breakthrough ‘silumina’ product mixed silicone with high-purity alumina and traditional graphite to fix this.
The material looked like a promising candidate for new batteries on paper. However, further studies questioned the ‘cost-to-reward’ ratio of adding graphite.
The latest DFS has scrapped those plans and opted for another material instead.
The new material from the plant will be 8,000tpa of alumina-coated metallurgical silicon. By skipping the graphite, they simplify the process and boost their production eightfold.
That means expanding the plant’s output from 15 gigawatt-hours (GWh) to 120GWh worth of material.
The more straightforward process means customers will mix Altech’s material into their existing battery plants. This should boost battery density by at least 30%.
For the plant’s finances, the DFS outlines an attractive internal rate of return (IRR) of 34.6%. That would mean a 2.4-year payback period.
The capital costs for the project are estimated at €112.5M. The construction period for the plant is 24 months, with a production ramp-up of three years.
The project’s Net Present Value (NPV) is €684.8 million, at a discount rate of 10%.
A pilot plant built in Saxony is nearing completion, with plans to be operational by mid-2024.
Outlook for Altech
The clear issue for Altech’s stock moving forward is the sheer complexity of their product for investors.
In both R&D terms and ease for new investors, it’s challenging to navigate the bleeding edge of battery technology.
Many other battery chemistries are also in play, without any clear winner.
Altech has also created compelling larger 60KWh sodium-based batteries and has many prototypes.
The apparent target market for their batteries is the European market.
With many efforts this year in environmental accreditation, they have courted European Carmakers.
Altech said they have shared their technology with two German automakers and two from the US.
A US battery materials company also has access, although no trade agreements have been announced from any of these talks yet.
These prototypes remain highly speculative and won’t likely reach a wider market soon.
The plant stands apart from their other projects as its output can be easily integrated into existing battery plants with seemingly little cost.
As you can see below, graphite, for now, has a clear market share of battery materials.
Source: Wood Mackenzie (Si-C is the standard Silicone Carbide)
If the market share of Silicone-carbide (Si-c) batteries increases, there could be an incentive for Altech to shift back into other forms of production.
Thankfully, their coating process can work with graphite or silicone, giving the plant some wiggle room if demand shifts.
Overall, the company offers a compelling, albeit speculative play into the technology driving our future.
The electric age’s new oil
The future price of critical minerals like lithium has been facing a hot debate.
Short-term oversupply, mixed with hoped future demand, has left the space confused.
But demand for another critical resource has a much clearer long-term picture.
The movement of economies away from fossil fuels means skyrocketing demand for one red metal in particular.
Goldman Sachs dubs it the ‘new oil‘, and it’s critical in our ability to build a new grid and power EVs.
Without it, our hopes of Net Zero and full electrification will fail.
But record demand has not been met with adequate supply.
Geologist James Cooper thinks the time is ripe for investors to consider jumping in.
What’s this critical metal, and what is the opportunity?
Click here to find out more about the electric age’s ‘new oil’.
Regards,
Charlie Ormond
For Fat Tail Daily
