KUCHING: Press Metal Bhd’s (Press Metal) new plant in Samalaju is a strategic move as it is has been identified as one of three growth nodes in the Sarawak Corridor of Renewal Energy (SCORE) for development of heavy industries, including aluminium smelters.
A Press Metal announcement to Bursa Malaysia stated that it had received approval from the state planning authority for the proposed development of Phase 2 of its expansion plans. The proposed expansion would be undertaken via wholly-owned subsidiary Press Metal Bintulu Sdn Bhd.
The land allocated for Phase 2 measured approximately 480 acres and was located within the Kemena Land District in Samalaju Industrial Park, Bintulu division. It would be developed in several phases for the commissioning of a new aluminium smelter which would have an estimated capacity of 240,000 tonnes per annum.
Research group AmResearch Sdn Bhd (AmResearch) viewed this latest development as another major step towards the crystallisation of a tariff structure for power offtake between Press Metal and Sarawak Energy Bhd (Sarawak Energy).
AmResearch’s channel checks indicated that the water levels at the Bakun dam had already reached at least 185 metres – close to the critical mark of 195 metres required for the dam to start generating capacity, expected by May this year.
Work on the 275-kilovolt Bakun-Samalaju transmission project (costing an estimated RM209 million) that is supposed to supply power from the Bakun dam to the Samalaju industrial park had commenced last year.
Press Metal has a strong bargaining leverage to secure power offtake of 600 megawatts from Sarawak Energy as it was the only energy-intensive play currently operational in SCORE.
This offtake leverage would help solidify the group’s position as an integrated aluminium producer within the region. Phase 2 was expected to cost an estimated US$600 million, potentially tripling the group’s smelter capacity to 360,000 tonnes.
AmResearch’s current net profit forecast of RM128 million for financial year 2011 forecast of 60 per cent increase year-on-year only assumed contributions from Phase 1. The research group pegged the fair value share price at RM3.28.