Press Metal upbeat about global aluminium prices
KUCHING: Press Metal Aluminium Holdings Bhd is upbeat about global aluminium prices going forward on anticipated increasing demand for the commodity as world economic recovery gathers steam.
Group chief executive officer Tan Sri Koon Poh Keong (pic) said as global economic recoveries are expected to continue, demand of aluminium will also pick up and, consequently, prices are expected to be kept at elevated levels.
He said the global aluminium price had strengthened significantly over the last few months to current levels of some US$2,400 (RM9,907.20) per tonne, and that the completion of Press Metal’s new Phase 3 smelter under capacity expansion in Samalaju Industrial Park, Bintulu is timely.
Aluminium price, according to Press Metal, started to recover in mid-2020 and was back to pre-Covid-19 levels by fourth quarter-2020 as global industrial production rallied from its contraction earlier in the year.
The new smelter boosts the group’s smelting capacity by 42% to 1.08 million tonnes per year from existing 760,000 tonnes per year, further cementing Press Metal as the largest aluminium smelter in South-East Asia.
“The new phase (smelter) has commenced production, and we anticipate operating at full capacity by the third quarter of 2021, ” Koon said in the company’s 2020 Annual Report. He said the group’s smelting operations had continued to operate at optimium capacity despite the movement restrictions due to the Covid-19 pandemic.
The strong aluminium price drove Press Metal’s (pic above shows smelting plant) quarterly earnings to record high.
In first quarter ended March 31,2021 (Q1FY21), group’s after-tax profit soared to about RM258.6mil from RM130.3 million in Q1FY20 as group revenue climbed to RM2.1bil from RM1.83bil in Q1FY20 or an increase of RM271.7mil or 14.8%.
For the coming years, Koon said global aluminium supply will face challenges as decarbonisation policies and environmental awareness are limiting the potential of any new aluminium supply.`
On the supply of key raw materials - aluminia and carbon anode - to the group smelting operations in Bintulu and Mukah plants, he said Press Metal will be able to source a significant amount of its requirements internally by end-2021.
“We now own stakes in Australian and Indonesian alumina producers as well as an investment in Shandong’s carbon anode production. With this, reliance on third party suppliers will reduce considerably, providing raw materials security for Press Metal’s smelting operations.” he said.
To recall, Press Metal has invested US$80.2mil (RM331.07mil) for a 25%-stake in PT Bintan Alumina Indonesia (PT BAI), which is constructing a alumina refinery.
The investment will provide the group with long-term supply of alumina via the purchase of not less than 50% of alumina produced before completion of the manufacturing plant and up to 1.5 million tonnes upon project completion.
PT BAI has commenced production of its Phase 1 refinery with one million tonne capacity per year, and Press Metal expects the first shipment of alumina from the plant next month. In early 2019, Press Metal acquired 50% equity interest in Japan Alumina Associates (Australia) Pty Ltd (JAA), which holds a 10% interest in Worsley Alumina Unincorporated Joint Venture, 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 year.
“With our investments in JAA and PT BAI, the group will be able to secure up to approximately 80% of alumina requirement based on the enlarged smelting capacity of 1,080,000 tonnes per year.
“This will serve to enhance the stability of our group’s aluminium operations by reducing reliance on third party suppliers and shielding us against supply disruptions, ” Press Metal said in the management discussion and analysis in the annual report.
Press Metal, via a tie-up with Sunstone Development Co Ltd, set up Shandong Sunstone & PMB Carbon Ltd Co to manufacture pre-baked carbon anode, a primary consumable for the group’s smelting operations.
Sunstone’s annual capacity is 300,000 tonnes and is now in full capacity production.
Press Metal is entitled to purchase up to 160,000 tonnes per year with an option to purchase an additional 60,000 tonnes out of the plant’s total annual production capacity. The investment allows Press Metal to secure about 40% of its enlarged requirement.
Koon said Press Metal has also embarked towards meeting environmental, social and governance (ESG) standards through several initiatives and has recently committed to be “Carbon Neutral” by 2050 across all its business subsidiaries and operations.