Suvo Strategic Minerals Limited (ASX: SUV) has signed a binding Subscription and Option Agreement to acquire a 26 per cent interest in Australian “green” high purity alumina (HPA) specialist Dingo.
In addition to the placement, Dingo is granting Suvo with a clear pathway to acquire up to 76% of the issued capital of the company, subject to various milestones being met. At the end of the stage 3 earn-in, Suvo will have an exclusive period to negotiate a share purchase acquisition of the remaining shares on issue in Dingo, subject to the Listing Rules and any further regulatory approvals.
Dingo’s intellectual property (IP) intends to take advantage of “urban mining”, transforming waste aluminium feedstock into HPA, adopting a novel closed loop recycling process.
This recycling process allows for unrecoverable materials to be continually recycled without any waste going to landfill.
The traditional Hydrochloric Acid Leach technique used for extracting HPA from kaolin, requires the calcination of kaolin feedstock, followed by hydrochloric leaching of the calcined clay. Other kaolin related HPA extraction technologies include patented Solvent Extraction and Griffin Process technologies, which are still under development.
Dingo’s IP is currently at the concept study level and Dingo intends to use funds from the placement to support the advancement of a scoping study, as well as for general working capital.
The scoping study has been designed to assess the techno-economic viability of Dingo’s proposed flowsheet to produce HPA and validate the feasibility of a potential near-term project.
The placement is subject to conditions precedent, including Suvo obtaining a letter from Dingo’s patent attorneys setting out the current status of the Dingo IP, any necessary regulatory approvals and Dingo undertaking a reconstruction of its capital structure.
HPA is a high-purity form of aluminium oxide (Al2O3), with a minimum purity level of 99.99 per cent, and is a high value critical mineral used in the production of portable electronics, electric vehicles and LED lights.
HPA is being increasingly consumed in the manufacture of large format lithium-ion batteries, where it is used as a high-performance insulator to separate positive and negative components of the battery and prevent short-circuiting.
It is also a critical material in the production of synthetic sapphire, which is used to manufacture substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch- resistant sapphire glass used in optical windows and electronics, such as smart phones.
The global HPA market was valued at $1.3 billion in 2019, and is projected to reach US$4.8 billion by 2026, growing at a CAGR of 20.7 per cent1.
Several factors are contributing to the expected global HPA demand growth, including global adoption of LED lighting, smart technology and the growing electric vehicle market.
Australia’s Federal Government recently added HPA to the critical minerals list as part of the 2022 Critical Minerals Strategy, citing broad-ranging economic and strategic importance.
HPA is traditionally produced using aluminium metal as a feedstock, which is typically sourced from bauxite or kaolin mines.
However, with global aluminium demand forecast to increase nearly 40 per cent by 2030, the aluminium sector will need to produce an additional 33.3Mt to meet demand growth in all industrial sectors – from 86.2Mt in 2020 to 119.5Mt in 20302 while achieving stringent reduction in embedded emissions.
This presents an opportunity for recycling processes, such as that being developed by Dingo, to help meet the rising need for high quality low-carbon aluminium to create HPA.
More than 35,800 tonnes of aluminium cans are recovered in Australia per annum, accounting for almost two thirds of aluminium cans used by consumers. It is estimated that the remaining 1 billion cans fail to enter the recycling system and will often end up lost to landfill.
In addition to helping meet some of the rising demand for HPA, there are numerous environmental benefits compared to traditional mining practices to source aluminium.
Recycling aluminium requires up to 95 per cent less energy than production from ore, with the recycling of one aluminium can saving enough energy to recharge nearly 20 smart phones3.
Furthermore, every tonne of aluminium cans recycled is estimated to save 17.7 tonnes of CO2 equivalent, as well as 202kL of water, while having the added benefit of reducing waste landfill.
Other aluminium waste streams that currently contain unrecoverable composites include coffee capsules, aluminium foil, e-waste, manufacturing wastes and aircrafts.
The decision to acquire an initial 26 per cent interest in Dingo is in line with Suvo’s commitment to building a resilient and sustainable commodity offering from its industrial minerals assets and novel industrial processes,” Executive Chairman, Henk Ludik, said.
The staged structure for Suvo to increase its interest in Dingo presents a low risk approach for shareholders as we prove up Dingo’s proprietary technology to produce this critical mineral.
Recent market reports show that demand for HPA in powder form is expected to grow to 187,000 tonnes per annum by 2028, with this growth likely to be constrained by supply limitations, leading to a potential spike in prices as supply struggles to keep pace with demand.
HPA is a commodity derived from kaolin production. Suvo has extensive operations in the development, production and sale of kaolin products and believes the acquisition will generate synergies with Suvo’s existing technical and commercial expertise.
Dingo’s bespoke IP offers a potential pathway for Suvo to produce a sustainable source of HPA with a low carbon footprint, compared to traditional HPA production, and take advantage of rising demand and prices.
“We look forward to providing shareholders with further updates on this unique market opportunity as the project progresses.”