KUALA LUMPUR: Press Metal Aluminium Holdings Bhd has agreed to pay US$80.2mil (RM331.5mil) for the subscription of a 25% stake in an alumina producer based in Bintan, Indonesia.
PT Bintan Alumina Indonesia (PT BAI) is currently in the midst of constructing a one million tonne aluminium oxide refinery project together with necessary facilities in Galang Batang, with expansion for another one million tonne.
“This is an exceptional opportunity for us to invest in a refinery which will enable us to secure supply for our alumina needs," group chief executive officer Tan Sri Paul Koon said in a statement today.
"Together with our earlier acquisition of Worsley, we will be able to cover approximately 80% of our enlarged alumina requirements moving forward," he said.
The proposed subscription of shares in PT BAI provides Press Metal the opportunity to secure a long term supply of alumina and purchase not less than 50% of alumina produced before completion of project and up to 1.5 million metric tonnes of alumina produced upon completion of the project.
This allows Press Metal Group to effectively hedge the supply of alumina for its smelters.
"In addition, the close proximity of this project’s location as compared to our present alumina sourcing from Australia will translate to substantial logistic cost savings," Koon said.
Press Metal Group owns a 120,000 tonne annual capacity smelting plant in Mukah, Sarawak and the facility in the Samalaju Industrial Park in Bintulu, Sarawak has 640,000 tonnes of smelting capacity per annum.
Press Metal Group also recently announced the upcoming Phase 3 smelter plant in Samalaju which would increase total production capacity by 42%, assuming full power drawdown.
In May, Press Metal announced it had entered into a memorandum of understanding with PT BAI and its direct and indirect shareholders - Shandong Nanshan Aluminium Co, Ltd, Redstone Alumina International Pte Ltd and PT Mahkota Karya Utama to acquire the 25% stake.
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