Press Metal jumps 11% on plans to double smelter capacity

Press Metal Bhd rose as much as 11% after the firm signed a power supply term sheet with Syarikat Sesco Bhd, a wholly-owned subsidiary of Sarawak Energy Bhd.

The term sheet is for the supply of 500MW of power by Sarawak Energy to Press Metal's proposed phase III aluminium smelter at the Samalaju Industrial Park, Sarawak.

At 5pm, Press Metal was traded higher at RM3.42 with some 5.4 million shares done, making the stock the third largest gainer on Bursa.

Earlier, the stock rose as much as 34 sen to RM3.45.

In a statement to Bursa Malaysia today,, Press Metal said the firm and Sarawak Energy would enter into exclusive negotiations for a long-term power purchase agreement for the 500MW, which both parties would conclude soon.

“We are grateful that SEB (Sarawak Energy) has entrusted us with an additional 500MW of power. This is another important milestone that enables us to expand our presence in the aluminium industry,” said Datuk Paul Koon, group CEO of Press Metal.

With the additional power, Press Metal expects to double its smelting capacity for aluminium ingots in the proposed facility to 640,000 tonnes from the current 320,000 tonnes.

The expansion will bring Press Metal's total smelting capacity to 760,000 tonnes.

Koon said the power allocation would be made in two stages. The first potion of 330MW is expected to be available by end-2015, with the remaining 170MW available by early 2018.

Going forward, Press Metal expects its increased capacity to have a positive impact on earnings as the group anticipates aluminium consumption to increase, driven by higher uptake by the automotive industry amid economic recovery in the US.

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