OM to build RM210mil plant in Q4

Land clearing works have begun at site of manganese smelter

KUCHING: OM Holdings Ltd (OMH) expects to start construction of its proposed US$70mil (RM210mil) manganese smelting and sintering plant in Tanjung Langsat Industrial Complex, Johor Baru in the fourth quarter this year.

The Australian public-listed company said land clearing works for the project site was now being carried out by Johor Corp.

The project, which will be supported by a logistics and distribution centre, will have an annual production capacity of 66,000 tonnes of manganese alloy and 300,000 tonnes of manganese sinter.

“A detailed environmental impact assessment is currently under way and will be completed by the first quarter of 2012.

“Production is expected to commence in the first quarter of 2013,” OMH said in its latest operational, corporate and strategic update to the Australian Securities Exchange on July 5.

The proposed stockpiling, blending and distribution centre will be capable of handling up to 500,000 tonnes of raw materials.

OMH's wholly-owned subsidiary OM Materials (Johor) Sdn Bhd has acquired 40ha for US$20mil for the project, which is 80%-financed by a US$16.9mil term loan from CIMB Bank Bhd.

The company said the feasibility study of the project indicated a payback period of less than five years with the total US$70mil investment.

The Johor project represents OMH's first phase investment in a Malaysian smelter.

The second phase of investment is in a US$450mil (RM1.35bil) manganese and ferrosilicon alloy smelter in Samalaju Industrial Park, Bintulu within Sarawak Corridor of Renewable Energy (SCORE).

OM Materials (Sarawak) Sdn Bhd, a wholly-owned subsidiary of OMH, awarded a RM70mil contract to KKB Builders Sdn Bhd on July 7 to carry out the earthworks package of the proposed Bintulu smelter project.

KKB Builders, a wholly-owned subsidiary of KKB Engineering Bhd, was given 12 months to complete the contract.

OMH said the award of the earthworks package was critical and a pre-requisite to its power purchase agreement (PPA) negotiations with Syarikat Sesco Bhd (owned by Sarawak Energy Bhd) to supply 500MW of power from the 2,400MW Bakun hydreoelectric dam to the smelter.

The PPA negotiations are expected to be completed by September.

OMH said the Bintulu smelter was expected to begin commercial operations in early 2014.

It has an annual production capacity of 300,000 tonnes of manganese ferro alloys and 300,000 tonnes of ferrosilicon alloys.

Full capacity production is targeted to be reached by the first quarter of 2015.

OMH has also entered into a memorandum of understanding (MoU) with Cahya Mata Sarawak Bhd (CMSB) for an exclusive negotiation of business ventures and opportunities offered by the Bintulu project.

An 80:20 joint-venture company between OMH's subsidiary OM Materials (S) Pte Ltd and CMSB's subsidiary Samalaju Industries Sdn Bhd was proposed to be set up to undertake any business, like the supply of raw materials to the smelter.

“The Malaysian manganese and ferro silicon smelting project is underpinned by a unique combination of competitive advantages.

“(These include) competitively priced reliable power supply, geographic location close to raw materials and end-users, tax incentives, no import and export duties, pro-business government policies, skilled local workforce and well established existing infrastructure,” it added.

The OMH group now operates commercial mining operations in Australia, China and Singapore.