Press Metal sees 10-15% higher aluminium production by year-end

Press Metal Bhd is looking at a 10-15 increase in aluminium production by year-end as phase two of its smelting facility in Samalaju Industrial Park, Sarawak, is running at full capacity.

Group Chief Executive Officer Datuk Paul Koon Poh Keong said the higher production was due to the expansion of its Samalaju smelter plant which was currently producing about 320,000 tonnes of aluminium.

"Higher production was boosted by Samalaju's plant which is now operating at full capacity and we are also in the middle of expanding into phase three, which is expected to be operational by the last quarter of 2015," Koon told reporters after the company's extraordinary general meeting here Wednesday.

He said a capital expenditure (capex) of RM2 billion has been allocated for phase three and two-thirds of the amount has already been utilised.

"Another one-third of the capex is allocated for the final stage of phase three," Koon said.

The third phase of the expansion plan is divided into two stages, whereby the first stage will have an additional capacity of 210,000 tonnes of aluminium capacity while the second stage, when completed in two years, would add another 100,000 tonnes.

Press Metal, one of the two major players in the regional market, sought shareholders' approval for the proposed exemption of Alpha Milestone Sdn Bhd to convert a total of RM233 million nominal value of redeemable convertible secured loans.

"The proposed exemption will allow the company to reduce its debts and indirectly reduce the gearing ratio to 1.1 points from 1.8 points as at end of last year," Koon added. Asked on how the economic uncertainty would affect business, he said the external situation has had no impact on business as demand continued to come in from industries such as automotive, transportation, telecommunications and others.

"Crude oil prices are falling but the market needs aluminum to build power plants. We believe there is a shortage of aluminum in the market and our production will not slow down," he said, adding that, the regional market demand was for about six million tonnes of aluminium per annum.

Koon noted that the aluminium price had fallen about 10 per cent in line with the global market scenario.

However, he said the price was still relevant as Press Metal was considered a low-cost aluminium producer.

Commenting on the weakening ringgit, Koon said it would benefit the company which was involved in export activities.

"Most of the business is conducted in US dollars and we see a slight increase from our current earnings, which stood at about RM1 billion per quarter," he said.

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