ABx Group Ltd (ASX:ABX) has signed a lease agreement with Rio Tinto (ASX:RIO) for an industrial facility in Tasmania where it aims to establish a pilot plant for demonstration of its world-first proprietary process to produce industrial chemicals.

The agreement, signed by ABx subsidiary ALCORE, involves the lease of a 500sqm facility adjacent to Rio Tinto Aluminium’s Bell Bay smelter in northern Tasmania.

According to the contract, ALCORE also has the option of purchasing the site or leasing it for 10 years, subject to the proven performance of the pilot plant and the decision to construct a commercial plant.

ABx has said the connection between the two companies and their production goals represents “an exemplary demonstration of the circular economy” as ALCORE moves towards the production of chemicals like hydrogen fluoride from a waste product created during the aluminium smelting process.

More specifically, hydrogen fluoride is set to be converted to aluminium fluoride, an essential chemical for aluminium smelting that is currently 100% imported – according to plans for a commercial plant at the facility.

The lease agreement is another step towards the establishment of the pilot plant, following the announcement that the Tasmanian government had provided indicative terms and conditions for a $1 million conditional loan for the pilot plant.

ABx Group director and CEO Mark Cooksey said this was a welcome milestone in the development of the company’s chemical processing plans.

“Securing the facility at Bell Bay is a critical step in advancing our continuous pilot plant,” he said. “The location is ideal, offering proximity to key infrastructure while allowing us to progress rapidly with minimal upfront costs.”

Mr Cooksey also added: “This is a significant advantage as we move closer to our goal of recycling fluorine waste into industrial chemicals at a commercial scale.”

ABX shares last traded at 3.7 cents – a rise of 2.78% today.

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