Various people have been poohpooing 4N HPA by saying "Alcoa can make it whenever we want, we make 99.9x% (3N) at Wagerup we just flip a switch and we can make 4N any day of the week, and we'll drown you all out" but the reality of that is and always has been bupkiss. Alcoa makes 3N HPA for use in ceramics, refractories, abrasives and so on, and makes ~40ktpa which sells for between US$3K and $5K per tonne.
Its precursor which goes in to the alumina plant must be refined hydroxide with a 99.99% purity pre-calcination. This 'alternate feedstock' is the precursor they use at Wagerup to get their 3N alumina (their 'specialty products') via their existing plant and equipment. The Alcoa MOU has, clearly, just been about testing whether their boehmite precursor can be made into 4N HPA. This is the feedstock they presented to the FYI pilot plant.
This is firstly an admission there has been bluffing about their ability to make 4N HPA, and secondly that their existing plant is incapable of doing so. thirdly, it's clear Alcoa is investigating the quantum of the value add between 3N and 4N HPA because it's pretty obvious that there's a ticket to be clipped.
But the question is this; is the value in buying their precursor for use in a HCl processing operation (on an alumina %) greater than the cost of obtaining the same input alumina via the front end kaolin kiln and acid plant?
FYI pays (on an alumina basis, via the front end costs) about as much as A4N does for buying 'agricultural chemicals' for reprocessing and upgrading. Consider KRR's move in to buying ag chemicals to short-circuit sourcing geological sources of alumina. They will pay on parity basis, about $2,400/t for Al2O3. This puts a stiff floor under the cost of 4N HPA via refining methodology.
The question Alcoa will be asking itself is, 'can we capture more of the $22,000 price difference between 3N and 4N, and not blow more on the capital costs doing that, than the alternative which is selling the precursor to the 3N to FYI", which seems a simple equation.
FYI will be asking itself, can we save all the hoohah and fiddle-faddle of running a mine, crushing and screening plant, and kiln for the kaolin, by just buying precursor off Alcoa?" and that equation is a little more difficult to work out.
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