Boudreault was lying awake at night, pondering two seemingly disparate things: stomach acid, and Quebec’s untapped reserves of alumina. Boudreault, a solid-state physicist consulting for a mining exploration firm, had heard from a prospector that Quebec was rich in aluminum oxide, the chemical compound used to make aluminum. But the alumina was trapped in Gaspé Peninsula clay: local industry had yet to figure out how to extract it.
“The planet is made of 12 per cent alumina,” says Boudreault over the phone from his office in Saint-Laurent, Que. “This clay has double the earth’s average, 24 per cent.” The problem was how to separate the clay’s main ingredient — silica — from the alumina. “I came upon the fact that most animals use hydrochloric acid in the stomach to digest food — but we don’t digest soil,” Boudreault recalls. “Nature has developed an acid that leaves the silica behind.”
Boudreault — who studied at Université de Montréal and Cornell University, and began his career in aerospace, later migrating to semiconductors and materials — didn’t know that his middle-of-the-night musings would lead him to the position of CEO at Orbite Aluminae, the new incarnation of Exploration Orbite, the company he had been working for when alumina entered his, er, orbit. Nor could he have predicted the thrum of excitement that currently surrounds Orbite.
In January, the 100-employee, publicly traded firm produced its first tonne of high-purity alumina (HPA) — a key ingredient in a wide range of things including LED lights, smartphones and prostheses — at its new, commercialscale plant in Cap-Chat in the Gaspé region of Quebec. In March, it shipped samples to thirty customers for testing. The company projects production of five tonnes of HPA daily by early 2014. Orbite, which has mining rights to a 350-hectare, aluminous-clay-rich property in the Gaspé’s Grand Vallée, also has smelter-grade alumina (SGA), the kind used in aluminum production, on its hit list. The company has signed a memorandum of agreement with Russian aluminum giant UC Rusal, the largest aluminum producer in the world, to build a plant with the capacity to extract 540,000 tonnes of alumina from clay each year. That, Boudreault says, would barely scratch the surface of the need for alumina in Quebec. In fact, most of the Canadian aluminum market, the third-largest in the world, resides in Quebec, partly because the province’s abundant supply of cheap hydroelectricity makes the energy-intensive process of extracting aluminum from ore more economical. The big three Quebec companies — Alcoa, Rio Tinto Alcan and Aluminerie Allouette — process 6 million tonnes of alumina annually, most of which is shipped in from far-flung countries such as Jamaica, Brazil and Australia, at an extra cost of $100 a tonne. “We eventually expect to fill 50 per cent of the alumina requirements in Canada. That will require 10 plants of that size,” says Boudreault.
On both fronts — HPA and SGA — Orbite is applying (or would apply) its unique, hydrochloric acid process for alumina fabrication, which creates no toxic waste and also allows for extraction of valuable rare earths and rare metals such as gallium, scandium and magnesium, which are in demand for things like solar cells and electronics.
Orbite, in theory, has a long way to grow. If the company comes anywhere near its aims, its technology, for which it has secured nine patents and has 32 pending patent applications in 10 countries, may profoundly alter the aluminum industry along the way.
“It’s disruptive,” says Luisa Moreno, a metals and mining analyst with Euro Pacific Canada who is watching the company closely and rates it as a speculative buy. “It will be able to potentially replace what exists right now and be both more economic and cleaner.”
Because of that, anyone with an interest in aluminum is paying attention. “The whole community is waiting to see how this project will play out,” says Vladimiros Papangelakis, a professor in the department of chemical engineering and applied chemistry at the University of Toronto. “If it is a success, then it’s going to be a big success. It’s going to create waves. It will be a change in the traditional way we make aluminum for the first time in 130 years.”
No one is watching more closely than Boudreault. He calls himself the “janitor” of the technology, and has been there through every stage of its development.
Here’s how the process works. Aluminous clay is broken into small particles and bathed in hydrochloric acid at high pressure and temperature. Silicon and titanium, which are not dissolved by the acid, are filtered out. Trial and error through years of research has allowed Orbite to determine how to then leach each remaining material from the solution, one at a time by adjusting the pH levels and other solution conditions. First up: aluminum which is separated as aluminum chloride and crystallized. Next, further adjustments allow iron to be separated and precipitated. The hydrochloric acid is then evaporated and re-condensed, allowing the rare metals and rare earths to be removed — and more than 99.75 per cent of the acid to be recovered. Meanwhile, calcination at a temperature above 1250 degrees Celsius transforms the hydrated aluminum chloride into aluminum oxide (alumina), ready for sale.
The acid recovery is key. “When you recycle the acid, you have no impact on the environment,” says Boudreault. “And it becomes economically viable. We can produce alumina for $180-$200 a tonne. The market will produce it for $290 a tonne.”
The beauty of the method, says Boudreault, is that the acid does not digest the silica and the rest of the materials can be extracted at a fairly high purity, which gives them market potential. “We could go forward and remove each of the materials from the pregnant liquor one by one,” says Boudreault. “First the aluminum, then the iron, and oxidize it, then the magnesium and oxidize it, then the gallium and so on until we hit the rare earths.” What’s left at the end of all this is innocuous, high-purity silicate — yet another substance Orbite believes it can sell.
The process has some obvious advantages over the current industry standard, developed in 1888 by Austrian chemist Karl Joseph Bayer. He patented a process for refining bauxite, ore that’s rich in aluminum hydroxide. The Bayer process mixes bauxite with caustic soda (otherwise known as lye) in high-pressure digesters at 300 to 480° F. The lye draws the alumina out, creating sodium aluminate, which is transformed into alumina through crystallization. The Bayer process gets the job done with bauxite reserves, which consist of 30 to 60 per cent alumina, but with lower concentrations of alumina, such as in Quebec clay, it becomes too costly. Moreover, the Bayer process leaves behind a highly alkaline mixture of iron oxide, silica and titanium oxide — plus some stubborn alumina — known as red mud. For every tonne of alumina, you get two tonnes of red mud. Boudreault likes to say that the Bayer is “really a process to produce red mud and, as a byproduct, alumina.”
That mud is a growing concern: an estimated 3 billion tonnes of red mud fill lakes and tailings ponds around the globe, a figure that grows by about 150 million tonnes annually. If the sludge spills or leaks — and it does — the results can be devastating. In Hungary in 2010, more than one million cubic metres of red mud poured through a broken retaining wall at a waste reservoir and flooded nearby villages, killing 10 people and injuring dozens more. The catastrophe cost the company involved, MAL Hungarian Aluminum, $647 million.
For obvious reasons, the aluminum industry is talking the talk about red mud. The International Aluminium Institute has created a website devoted to “Bauxite Residue Management.” Bio-remediation methods, such as washing the residue with great quantities of seawater, are undergoing tests in Ireland and Australia, but the dependence on climactic conditions and the difficulties in disposing of the resulting salts have hindered the development in this field.
Here again, Orbite finds opportunity. In February, the company announced a partnership with Veolia Environmental Services, an international waste management firm based in France, to remediate red mud. The plan is to process red mud using the same technology Orbite has developed to separate alumina from clay, extracting each substance one by one including the alumina left over by the Bayer process.
Doing away with the caustic solution that creates red mud is the magic bullet, says Mansoor Barati, an associate professor in materials science and engineering at the University of Toronto. “The caustic changes the pH of the land, if it touches your skin it can burn, you can never get it all out.” Since Orbite’s process works to both remediate red mud and avoid its production in the first place, it could be a game changer.
But the process isn’t perfect. Working with hydrochloric acid is tricky and has generally been avoided by industry. One, it will literally eat your equipment. Two, it’s not cheap. And three, working with acid requires keen control — it’s unforgiving of even minute temperature variations or pH levels. “Chloride chemistry is not very popular,” says Papangelakis. “It’s a relatively expensive agent and it always takes a big toll on the materials of construction.”
But these problems, in the time of Orbite, begin to seem passé. The company’s production tanks are sprayed with glass on the inside, effectively lining them with silica, which we know is immune to the acid. The company’s ability to reuse 99 per cent of its acid eliminates a major expense (“We expect 25 times fewer trucks of acid,” says Boudreault). And sophisticated computers and sensors make temperature and pH levels easier to finely monitor than in the past.
That doesn’t mean Orbite faces no challenges. “They have proven the process at the pilot level, but there are always surprises when you go full-scale,” says Papangelakis, who also says that because the company doesn’t reveal the conditions — pH and temperature — at each step of its process, it’s impossible for him to assess how well it might work. “We will never know until the whole exercise is moving forward and a largescale plant starts to operate.”
Even supposing it can keep glitches to a minimum, the company is entering an industry in a slump. And the market, upon which Orbite relies as a public company, can be harsh. On April 2, after the company announced a $16.9 million loss in 2012 and higher-than-projected capital costs for 2013, two analysts (including the bullish Moreno) lowered their price targets on Orbite stock. The result was a 22 per cent plunge in share price, to $1.07, which led the Toronto Stock Exchange to suspend trading on Orbite, and the company to issue a press release attempting to douse the panic: “Orbite is still a development company with multiple projects, each with different capital requirements. In light of the numerous projects that the Company is developing, the Company continuously assesses financing options . . .” It doesn’t help that its future potential major clients, Quebec’s aluminum giants, show no signs of being thrilled over Orbite’s appearance on the scene. The Aluminium Association of Canada refuses to comment on the prospect of Orbite as a local alumina supplier. Representatives of Alcoa, Rio Tinto Alcan and Aluminerie Allouette also declined the opportunity to comment. Boudreault points out that Alcan, which operates a single alumina plant in Quebec and supplies much of the rest of the local needs through its Australian plant, is a competitor. Aluminerie Allouette, meanwhile, ended a cooperation agreement with Orbite in 2012, reportedly converting a $1-million loan into Orbite stock, a break that has raised some questions. Boudreault insists none of this is of real concern: “Changing people’s minds takes awhile, especially when a method like the Bayer is so well-established. A new way of doing things — that’s troublesome. But as we start to generate material at a lower value, they might become quite interested.”
It will be a few years before Orbite truly needs the patronage of the local big three — the smelter-grade market is not a priority one. When Boudreault realized Orbite’s process could produce a highpurity alumina, defined as greater than 99.9 per cent pure, he steered Orbite to cut its teeth on HPA instead. The HPA market is still relatively tiny — about 10,000 tonnes per year versus 80 million tonnes for smelter-grade — but with its higher margins, it may be a forgiving starting point. While SGA is sold for about $325 a tonne, HPA starts around $20,000, and can go much higher. Also, Boudreault saw the applications for high-purity alumina — from LED lights to tablet screens — as good bets. For example, as municipalities replace energy-sucking incandescent bulbs, the market for LED lights is expected to burgeon to $2 billion annually by 2020 for streetlights alone. “Even if we make some mistakes,” says Boudreault, “we’d still make enough money.”
Not everyone is convinced. A well-known bear on Orbite, Jon Hykawy, an analyst at Byron Capital Markets, questions the company’s ability to compete with established HPA players, mainly companies in China, Taiwan and Japan, especially given that most HPA requirements are in that part of the world. “I think there’s growth potential there,” he says, “but the incumbent industry has the potential to cover that off.”
Hykawy, in fact, rhymes off a long list of doubts about Orbite. Can it really find a market for its high-purity silica? If not, it will be expensive to store. Its business model depends too much on sales of rare earths and metals, for which he projects a more conservative return than Orbite. His main questions, though, have to do with the very core of Orbite’s raison d’etre: its technology. “On paper it looks like a great thing,” he says, “But it depends on too-precise knowledge of pH and temperature of the system. You’ll find none in the world. It doesn’t work in practice.”
Boudreault and his company’s investors beg to differ. These include big backers such as Sprott Asset Management and AGF Investments, as well as 14,000 Canadian shareholders, some of whom have travelled to the Gaspé to see Orbite’s plant (Boudreault claims it has become a bit of a tourist destination.). If Orbite succeeds in gaining a footing as a supplier of HPA — the company has so-far achieved an alumina purity level of 99.99 per cent, known as 4N purity, and is aiming for as high as 6N or 7N — revenues from that venture will be reinvested into development of its red mud remediation and its smelter-grade markets. On the red mud front, Orbite’s agreement with Veolia, which boasts a track record in collection, sanitation, treatment and recovery, looks promising. “The idea,” says Moreno, “is to have Veolia be responsible for the financing of the project, and the operator as well. Orbite’s going to share and pass on the technology.”
Boudreault likes the way this scheme could ease Orbite’s cleaner approach into the established aluminum industry. “Because we can enter the chain of production through the red mud, we can convert a lot of the Bayer process through their back end.” He recalls the extremely high value placed on aluminum back when the Bayer process was developed. “The material was worth so much, the idea of polluting the universe was not an issue, people would do anything — even create two tonnes of red mud for every tonne of the stuff.”
In contrast, if Orbite holds up to its promise, the aluminum of today may become as innocuous as it is common.