Engineering firms SMS Group and Melewar Group have thrown their support behind Altech Chemical’s proposed high purity alumina (HPA) project, investing around $8.1 million of a $17 million placement to fund ongoing development of the Malaysian project.

German group SMS, which was recently appointed engineering, procurement and construction (EPC) contractor for the HPA plant, invested US$4 million (A$5.1 million).  Malaysian firm Melewar Group is the construction contractor for HPA plant and has provided $3 million.

In total, Altech placed 122.9 million shares at 14c per share issue price, a 17 per cent discount to the 15-day volume weighted average price (VWAP), to raise $17.2 million. The remaining $8.9 million will be received from sophisticated and institutional investors.

Altech’s shares have fallen today, down 3.5c or 19 per cent to 15c in late morning trade.

“The direct investment by SMS in Altech strongly demonstrates their commitment and confidence as EPC contractor to the project,” Altech managing director Iggy Tan said.

“The ongoing support of Melewar Group is equally important; the group has supported the company since 2015 and is a strong believer of our HPA project and the construction of the HPA plant in Malaysia.

“The placement leaves us well capitalised to complete the optimal funding arrangements for the HPA project in 2018.”

Issue of placement shares to Melewar Group and SMS will be subject to shareholder approval at the company’s AGM on 30 November.

Funds will go towards continuing development of the HPA project including payments for land, detailed engineering design, working capital and general corporate purposes.

Development of the HPA project is expected to begin next year.

Altech is aiming to be one of the world’s leading suppliers of 99.99 per cent high purity alumina.

HPA is a high value, high margin and highly demanded product as it is the main ingredient required to produce synthetic sapphire.

Synthetic sapphire is used in the manufacture of LED lights, semiconductor wafers used in the electronics industry and scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components.

According to Altech, global HPA demand is around 25,315 tonnes per annum with demand growing at a compound annual growth rate of 16.7 per cent mainly driven by growth in worldwide adoption of LEDs.

Altech has a market cap of around $45 million.