Amaero to establish titanium powder facility in United States

July 14, 2023

Amaero International Limited, headquartered in Notting Hill, Victoria, Australia, has announced that it will locate its flagship titanium powder manufacturing facility in Cleveland, Tennessee, USA, following a campaign by the state’s government to attract the company. Amaero also intends to relocate its research & development and corporate headquarters to the Tennessee location, which is convenient to the Oak Ridge National Laboratory and the University of Tennessee, Knoxville.

Amaero has reportedly received commitments for economic incentives from the Tennessee Department of Economic and Community Development, the Cleveland-Bradley Chamber of Commerce, the Tennessee Valley Authority and the Oak Ridge National Laboratory. It has also received a long-term commitment from the Tennessee Valley Authority (TVA) for investment credit and a long-term electricity rate subsidy. The TVA’s proposed investment credit includes a ten-year commitment for electricity rates that will be lower than the subsidised rates in the UAE and 85% less than the prevailing rates in Victoria. Further, the TVA is said to have established a strong infrastructure, including a dedicated substation for Spring Branch Industrial Park.

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Amaero reportedly signed a lease to be the sole tenant in a 12,100 m2 manufacturing facility in the 330 acre Spring Branch Industrial Park. The primary facility is comprised of 9,300 m2 and the shell is set to be completed in August 2023. In conjunction with the lease, a 2,800 m2 high bay extension is due to be designed and purpose-built for the installation of four electrode inert gas atomisers (EIGAs). The lease has a primary term of fifteen years, including an allowance for tenant improvements and an Option to Purchase. The lease payments are said to be approximately 75% less than the proposed built-to-suit facility at KEZAD in the UAE. It is expected that Amaero will occupy the 9,300 m2 facility in April 2024 and the 2,800 m2 high-bay extension in July 2024.

The decision to locate in Tennessee was made with the belief that it has the strategic advantage of a highly efficient and pro-growth business environment, as well as close proximity to primary customers, research and development partners, the supply chain, highly skilled employees and robust capital markets. Locating in the US looks to give Amaero more business development flexibility from an export control and technology transfer perspective.

The facility with a prepared pad for the high-bay extension is intended to enable Amaero to install the titanium powder production plant sooner than the proposed ‘build-to-suit’ project in the UAE. Amaero reportedly expects to accelerate breakeven operations by twelve months and to reduce working capital need by $22 million as a direct result. In November 2022, it estimated that the required working capital for the first three years (2023-2025) would equate to $78 million; the facility in Tennessee also looks to reduce the required working capital for the same 3-year period to $56 million and allow the company to achieve positive cashflow in 2026. Amaero expects that required funding for capital expenses (facility, tenant improvements and equipment) will remain unchanged from the previously proposed project at KEZAD.

The company also expects hat the required equity capital will not increase from anticipated equity capital for the UAE project. The US has more established and efficient capital markets for emerging growth companies, including venture debt and equipment leasing. Amaero’s executive leadership and board are said to have extensive relationships with financial and strategic investors in the US.

The US has also passed cornerstone legislation to fund and incentivise the re-shoring of advanced manufacturing, critical materials and defence production over the past year.

Amaero has reportedly proactively communicated with stakeholders in the UAE including Tawazun Economic Council, Abu Dhabi Investment Office, Emirates Development Bank and KEZAD who remain committed to providing enabling support for locating Amaero manufacturing operations in the UAE. Amaero looks to pursue “offset credit” funding for other strategic projects.

Hank J Holland, Amaero Chairman and Chief Executive Officer, stated, “This is a seminal event for Amaero and a cornerstone development for Amaero’s shareholders, our employees and our customers. With this development, we expect the cadence of material announcements and tangible milestones to accelerate.”

“Amaero is appreciative of the many stakeholders in Tennessee who quickly mobilised resources and proactively developed a compelling business case and competitive value proposition for the re-location of our flagship titanium powder manufacturing, research & development and corporate headquarters,” Holland continued. “Amaero will build upon the United States’ resurgent manufacturing sector and the strong regional manufacturing ecosystem with strategic industrial capabilities that align with the country’s highest priority initiatives in advanced materials, critical minerals and manufacturing.

“After nine months of all consuming efforts in the UAE, after advancing the build-to-suit planning at KEZAD and after recent receipt of the Term Sheet from Emirates Development Bank, it was difficult to consider last minute advances for alternative locations in Tennessee or other States in the Southeast US. At the same time, circumstances are fluid and we have a fiduciary duty to decisively pursue opportunities that are in our shareholders’ best interest. We appreciate the efforts and support of so many stakeholders in the UAE and remain interested in pursuing other strategic opportunities,” Holland concluded.

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