KUCHING: Press Metal Aluminium Holdings Bhd’s 25%-owned associate PT Bintan Alumina Indonesia (PTBAI) will double the production capacity of alumina to two million tonnes per annum when its phase two facility is due for completion in fourth quarter of 2022 (4Q22).
The phase two project is under construction after PTBAI commissioned its first phase alumina refinery in Pulau Bintan, Indonesia last year, according to group chief executive officer Tan Sri Paul Koon Poh Keong.
“With our investments in Japan Alumina Associates (Australia) Pty Ltd (JAA) and PTBAI, our group will be able to secure up to 80% of our alumina requirement based on the enlarged smelting capacity of 1.08 million tonnes per annum,” he said.
Press Metal group raised its annual smelting capacity by 42% to 1.08 million tonnes from 760,000 tonnes when its phase three smelter in Samalaju Industrial Park, Bintulu was fully commissioned last October. This cements Press Metal as South-East Asia’s largest aluminium smelter.
Press Metal subscribed for the 25% stake in PTBAI for US$80.23mil (RM352mil) in 2020 to further secure the supply of alumina,the primary raw materal for the group’s smelting operations.
A year earlier, the company acquired a 50% equity in JAA, which holds a 10% interest in Worsley Alumina Unincorporated Joint Venture in Australia, one of the world’s largest and lowest cost alumina producers.
Through this investment, Press Metal is entitled to a supply of 230,000 tonnes of alumina per annum.
By securing up to 80% of its alumina requirements through investments in JAA and PTBAI, Press Metal said this would enhance the stability of the group’s aluminium operations by reducing the reliance on third party suppliers and shielding the group against supply disruptions.
Besides alumina, carbon anode is another primary consumable for Press Metal’s smelting operations.
Via its 20% stake in joint venture company Shandong Sunstone & PMB Carbon Ltd Co (SSPC), which manufactures pre-baked carbon anode, Press Metal has access up to 220,000 tonnes of carbon anode out of SSPC’s total production capacity of 300,000 tonnes per annum.
The joint venture allows Press Metal to secure up to 40% of its requirements.
Koon said Press Metal was operating in a constrained environment in 2021 with the movement restrictions and international border closures which had impeded the availability of foreign technical expertise.
“As such, we had to re-allocate resources from existing smelters undergoing scheduled maintenance to meet the manpower required to commission our phase three smelter, resulting in less than optimal production volume in FY21. This situation has since been resolved,” he said in the company’s 2021 annual report.
The commissioning of the phase three smelter is timely as aluminium prices had strengthened significantly in 2021.
“Aluminium prices had gained almost 40% in 2021 and this trend followed through to 2022, mainly due to the supply tightness caused by power constraints curtailing production in Europe and China.
“Global carbonisation policies further limit new startups backed by coal power sources, providing a backdrop for elevated prices.“We remain optimistic on the outlook where rising demand from high growth low carbon industries such as automotive in terms of electric vehicles, renewable energy and electrification is met by tightened supply,” said Koon.
The strong aluminium prices boosted Press Metal group’s after-tax profit and non-controlling interest to cross the RM1bil-mark for the first time in FY21 (FY20:RM460mil) as revenue soared to RM11bil from RM7.48bil previously.
“The aluminium demand growth is set to accelerate when the global economy reopens and recovers, driven by applications in rapidly growing green industries, such as EVs, renewable energy and electrification.
“Increasing climate change awareness resulting in growing consumer-demand for low-carbon products is exerting pressure on producers to manufacture products with low carbon content.
“With only circa 25% of worldwide smelters running on hydropower, this could lead to a widening scarcity of low carbon aluminium in the future.
“Press Metal’s smelting operations are powered by renewable energy and the company is well positioned in the structural change driven by the global decarbonisation drive, according to Koon.
The group’s value-added segment, especially billets has also experienced elevated demand.
“Moving forward, we will further enhance our value-added capabilities and increase the portfolio of our extrusion products as we strive to support the consumer-product-related sectors.”
Press Metal owns two extrusion plants – in Klang, Selangor and Guangzhou province, China – which have an annual capacity of 50,000 tonnes and 160,000 tonnes respectively.According to Press Metal, the group has strong presence via its trading arms in the United Kingdom, Australia and north America to market its extrusion products internationally.
The primary markets for its products are China (36%), Malaysia and the UK (22% each), the United States (15%) and Australia (5%).