KUCHING: OM Materials (Sarawak) Sdn Bhd (OM Sarawak) has ramped up in stages the production of its ferroalloy smelting plant in Samalaju Industrial Park, Bintulu to 12 furnaces following resumption of operations from temporarily suspension on May 28.
The plant’s operations were suspended following a directive from the relevant government authorities after an active Covid-19 case detection exercise was carried out.
The plant was allowed to resume operations under strict standard operating procedures with additional Covid-19 precautionary measures in place early last month with an initial four furnaces.
“Production has subsequently ramped-up in stages, with 12 furnaces (6 FeSi and 6 manganese alloys furnaces) currently in production,” said OM Holdings Ltd (OMH) in its latest quarterly update for OM Sarawak’s operating performance.
OMH, which owns 75% equity interest in OM Sarawak, had its secondary listing on Bursa Malaysia in June 2021.
Joint-venture partner Cahya Mata Sarawak Bhd (CMS) owns the remaining 25% stake in OM Sarawak.
OM Sarawak currently has 16 units of furnaces, with 10 units allocated for the production of FeSi and six units for the production of manganese alloys.
The plant has a design capacity to produce between 200,000 to 210,000 tonnes of FeSi and 250,000 to 300,000 tonnes of manganese alloys per year.
OMH said as manpower shortages continue to impact the smelting plant’s ability to operate at full capacity as the country’s border remains closed with strict travel restriction imposed due to the pandemic, the plant’s production plan for second half-2021 may continue to be readjusted.
This is in accordance with the latest conditions, depending on manpower availability and scheduled leave rotation requirements.
“Given the prolonged period of operating without home leave for foreign employees due to border closures, it is expected that the pressure on the existing labour force will intensify in the fourth quarter (Q4) of 2021 and production plans may be further modified in the absence of any changes in the permitting process of foreign workers,” it added.
In the quarter ended June 30,2021 (Q2 of 2021) OM Sarawak recorded sharply lower production of ferrosilicon (FeSi) to 23,057 tonnes against 38,415 tonnes in the preceding quarter while the production of manganese alloys fell to 37,691 tonnes from 57,136 tonnes.
The plant’s manganese sinter ore production (commissioning phase) also declined to 14,223 tonnes from 22,826 tonnes during the same period.
The sinter plant has a design capacity to produce 250,000 tonnes of sinter ore per year.
“The final performance testing of the sinter plant and equipment installation works for the furnace conversion project are expected to be deferred to the end of 2021, following the extension of lockdown restrictions in Malaysia.” said OMH
OM Sarawak’s sales volumes for FeSi rose by 21% to 30,331 tonnes in the current quarter from 25,029 tonnes in Q1of 2021, with sales rolling from the preceding quarter due to logistical delays.
However, the sales volume of manganese alloys slipped marginally to 50,948 tonnes in Q2 of 2021 from 50,996 tonnes in Q1 of 2021.
According to OMH, the FeSi and siliconmanganese (SiMn) prices continued to perform strongly, with a sharp increase of 31% and 21% respectively as compared to Q1 of 2021.
FeSi prices closed at US$1,920 (RM8102.40) per tonne CIF Japan while SiMn closed at US$1,545 (RM6519.90) per tonne CIF Japan at end of June 2021.
“During the temporary production suspension, delivery of processed material to customers continued albeit at a reduced rate through third party logistic service providers to partially mitigate the impact to the supply chain,” said OMH.
In Q2 of 2021, OMH said loan repayments of US$4.8mil (RM20.26mil) was made to the plant’s finance lenders.