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Wednesday February 10, 2010
By B.K. SIDHU
Syed Mokhtar’s GIIG to team up with China’s Aluminium Corp
PUTRAJAYA: GIIG Holdings Sdn Bhd, a company controlled by billionaire Tan Sri Syed Mokhtar Al-Bukhary, and Aluminium Corp of China Ltd (Chalco), the world’s second largest producer of alumina, have teamed up to jointly develop an aluminium smelter plant in Samalaju Industrial Park in Bintulu, Sarawak at the cost of US$1bil.
The smelter plant will have an initial annual production capacity of 330,000 tonnes but it could rise to 1.25 million tonnes.
GIIG director Shahrir Shariff said construction of the plant would begin in the first quarter of next year, with completion expected in 36 months.
The project would source power from the 2,400MW Bakun dam.
Smelter Asia Sdn Bhd will be the special purpose vehicle that will develop the smelter plant, and it will have three shareholders, namely GIIG Holdings Sdn Bhd, Chalco and a Sarawak company.
Details on the equity portion for the shareholding structure were not provided as it was still being worked out but Shahrir told reporters after the signing ceremony yesterday that Malaysian shareholders would hold a majority stake in the venture.
Both GIIG and Chalco entered into a heads of agreement yesterday to develop the smelter plant, witnessed by Prime Minister Datuk Seri Najib Tun Razak and former premier Tun Dr Mahathir Mohamad.
The idea of setting up an aluminium smelter in Sarawak was first mooted in 2002 to capture part of the growing demand for aluminium in Asia, with plans to use excess power from the Bakun Project.
With the agreement inked, Shahrir said talks with Sarawak Energy Bhd (SEB) for the purchase of power for the smelter project would resume and that he hoped to “get a reasonable rate for the supply of energy for the plant.’’ The plant would need 600MW of power.
“We are looking at debt and equity funding for the smelter and talking to some Chinese and other banks,’’ he said when asked on how the project would be funded.
Chalco’s shares are jointly listed on the New York Stock Exchange and the stock exchanges of Hong Kong and Shanghai.
It owns and operates 31 companies and subsidiaries across China, has assets worth US$20bil and recorded group revenue of US$11.3bil for 2008.
Najib said the JV between Malaysia and China to develop an aluminium smelting plant in Samalaju Industrial Park reflected the confidence the Chinese government and investors had in making large investments in the country, and in Sarawak specifically.
“This gives a positive sign to the investment climate in Malaysia. I hope this marks a recovery in economy this year. Many more foreign investments should be flowing into our country,’’ Najib said.
He added that the development of the smelting industry in Sarawak would also provide a strong drive in the development of Score (Sarawak Corridor of Renewable Energy).
Industries that use energy and that can generate high income, as well as high-value and high-tech industries can be located in Sarawak, according to Najib.
Smelter Asia will be the second smelter project in the Samalaju Industrial Park, after another project by Salco, which is a 40:60 joint venture between Cahya Mata Sarawak Bhd and Rio Tinto Alcan (a subsidiary of Rito Tinto Aluminium, a leading global mining company based in Australia).
On whether there was still room to locate large smelting plants in Sarawak, Najib said: “Two licences have been given out. That is the commitment by the Government. We just have to work out the supply of power.”
He did not name the licensee but Smelter Asia said it had obtained all the necessary licences from the International Trade and Industry Ministry while it is learnt that Comalco, now known as Rio Tinto, also has a licence to set up a smelter plant in Sarawak.
Last month the State Grid of China, the world’s largest utility company, inked an agreement with 1Malaysia Development Bhd as the former has plans to invest in Sarawak’s economic corridor.
Some of the projects these parties may jointly pursue include an aluminium smelter and three hydropower plants, but details are still sketchy.
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