KUCHING: Cahya Mata Sarawak Bhd
(CMS) targets its long-delayed phosphate plant’s operation in Samalaju Industrial Park in Bintulu to start commercial production by September this year.
The plant’s ongoing commissioning activities are expected to conclude in second half-2026 (2H26), with initial commercial yellow phosphorous production expected by the third quarter (3Q26), according to company’s management.
Group managing director Datuk Seri Sulaiman Abdul Rahman Taib said the restoration of electricity supply to the plant last September made it possible for the resumption of testing and commissioning activities.
State utility firm Syarikat Sesco Bhd reconnected electricity supply to the plant more than two years after power was terminated due to a dispute over a power purchase agreement (PPA) inked in January 2019.
Subsidiary Cahya Mata Phosphates Industries Sdn Bhd (CMPI), which operates the plant, initiated an arbitration on the dispute in November 2022.
It said that the plant had not reached commercial operations when Sesco started billing it for cumulative electricity consumption and payment security shortfalls.
Sesco had counterclaimed RM342.25mil against CMPI for losses and damages. In July 2023, Sesco disconnected power supply to the plant after the Court of Appeal dismissed CMPI’s bid for a preservation order.
Separately, in November 2023, Sesco also commenced arbitration against CMS over alleged breaches of a corporate guarantee, backing CMPI’s obligations under the PPA.
Both proceedings have since been consolidated, and the arbitration proceedings are ongoing.
Sulaiman said CMS recognises the key risks faced by the phosphate plant that include its commissioning timeline execution, cost control during readiness and the ongoing arbitration proceedings related to the PPA’s dispute.
The company’s management acknowledged that any technical setbacks, regulatory delays or adverse outcome in the Sesco arbitration proceedings at the Asian International Arbitration Centre (AIAC) could defer the commencement of commercial production beyond the anticipated timeline.
The group mitigates this through a dedicated commissioning project team, active legal representation in the AIAC proceedings, and close monitoring of plant readiness milestones.
“Financial year 2025 (FY25) was undeniably challenging for the phosphates strategic business unit or SBU, which recorded a pre-tax loss of RM145.9mil due to plant preservation costs, interest costs, unrealised foreign-exchange losses and elevated commissioning costs,” said Sulaiman.
“To mitigate these, we maintain dedicated project governance, structured commissioning plans, and active oversight of technical readiness and regulatory compliance.
“Our focus is clear: complete commissioning safely and effectively, transition into initial commercial production, and progressively convert the segment from a loss position into a meaningful earnings contributor.
“As Malaysia’s only yellow phosphorous producer, upon full ramp-up post-3Q26, this asset is expected to become one of the group’s largest earnings contributors while supporting global food security and industrial value chains,” said Sulaiman.
He added that “phosphates remained a transformational long-term value driver”.
CMS, Sarawak’s sole cement manufacturer, has meanwhile made a strategic shift towards higher portland limestone cement (PLC) production, which reduced reliance on imported clinker and improved cost structures.
“Cement remains our cornerstone business and a key platform for both performance and impact.
“We are accelerating performance through three levers: strengthening PLC penetration toward an 80% sales target to reduce clinker factor and carbon intensity; improving production efficiency and cost structure; and investing in structural capacity and resilience through Mambong Clinker Line 2,” said Sulaiman.
CMS awarded the Clinker Line 2 project to Sinoma Industry Engineering (M) Sdn Bhd, a subsidiary of China’s Tianjin Cement Industry Design & Research Institute, as the engineering, procurement, construction and commissioning (EPCC) contractor for RM673mil last July.
The state-of-the-art 6,000-tonne-per-day clinker line is expected to take 21 months for completion.
Clinker Line 2 will raise subsidiary Cahya Mata Cement Sdn Bhd’s annual clinker capacity to 1.9 million tonnes from existing 900,000 tonnes.
Sulaiman said Clinker Line 2 represents the group’s most transformative capacity investment to-date.
He added that the production line incorporated a waste heat recovery system capable of generating up to 6MW of power, an advanced dust filtration system to reduce emissions to 50% below current regulatory limits, and the capability to produce multiple cement types.
“Beyond eliminating imported clinker dependency, the facility will significantly expand our production capacity and open up cement export opportunities in nearby markets.
“This is a strategic imperative as Sarawak’s infrastructure pipeline continues to grow,” he added
In FY25, the cement SBU generated higher revenue of RM665.1mil (group’s total revenue of RM1.11bil) and pre-tax profit of RM160.6mil.
CMS owns and operates cement plants in Kuching and Bintulu.
