Press Metal’s new plant to meet regional demand

PETALING JAYA: Aluminium smelter Press Metal Bhd’s new plant in Samalaju Industrial Park, slated to start operations in the third quarter of 2012, will cater to the rising regional demand for aluminium, currently at around 5.6 million tonnes per annum.

“Aluminium is used in all sectors and it is used more and more as the country becomes more developed. Malaysia at this moment is using 12kg per capita while the developed countries use 35kg.

“As we see more Asian countries converging on the path to becoming developed nations, aluminium usage is expected to grow higher,” group CEO Datuk Koon Poh Keong said after the AGM and EGM yesterday.

Aluminium is currently trading at around US$2,500 (RM7,575) per tonne.

At the meeting, shareholders approved Press Metal’s proposed corporate exercise where it will issue up to RM323.7 million Redeemable Convertible Secured Loan Stocks (RCSLS) with 147.1 million free detachable new warrants on the basis of one RCSLS and one warrant for every existing three ordinary shares held.

The proceeds will fund the RM2.1 billion Samalaju project.

“At the moment, this [issue of RCSLS] is to kickstart the project. We are also looking to arrange a term loan with the bank and other structure financing to raise funds to meet the 70% requirement for completion of the project, with the rest to be sourced from the company,” said Koon.
Smelter aims to produce enough aluminium to fulfil all of the country's needs, according to CEO Datuk Koon Poh Keong.

Construction work on the Samalaju plant, near Bintulu Port in Sarawak, has started and will require an additional nine months for full completion. It is anticipated that revenue contribution from this plant will not be substantial until it is fully operational in 2013.

When completed, Press Metal’s annual production capacity will increase by 240,000 tonnes on top of its existing 120,000 tonnes in Mukah and 85,000 tonnes in China.

On potential investors for the Samalaju plant, Koon said the group is open to investors who want a stake but priority will be given to its partner at the Mukah plant, Sumitomo Corp. With the expansion, Press Metal is looking to export 60% of its total production.

The company is set to replace imported aluminium products in the country as it is now in a better position in terms of logistics to supply to the local market.

“We want to produce metal for Malaysia to substitute all imported aluminium. Now that we have diversified into upstream activities, we gain better cost controls, thus helping the downstream industries” said Koon.

On the downstream activities in Sarawak, he said they are expanding and focusing on end customers.

“Our markets are all over. We have distribution networks in America, the United Kingdom, Australia and with Sumitomo as our partner, we are looking into Japan as a new market to distribute our products,” he added.