KUALA LUMPUR: Southeast Asia's largest aluminium smelter Press Metal Aluminium Holdings Bhd plans to set up an alumina refinery plant worth US$750 million (RM3.2 billion) in West Kalimantan, Indonesia with three Indonesian firms in its bid to expand upstream operations there.
In a statement today, the aluminium smelter company said it entered into a shareholders' agreement and share subscription agreement with PT Alakasa Alumina Refineri (AAR), PT Dinamika Sejahtera Mandiri (DSM) and PT Kalimantan Alumina Nusantara (KAN).
Press Metal said, the initiative aims to set up a strategic joint venture where KAN will establish and operate an integrated alumina refinery plant, power plant, jetty and supporting infrastructure in Sanggau, West Kalimantan.
Phase 1 of the refinery is expected to have an annual production capacity of 1 to 1.2 million metric tonnes, with a potential expansion to double this output.
It said the total cost for Phase 1 is US$750 million (RM3.2 billion).
Press Metal will subscribe for 80 per cent equity interest in KAN for a total subscription price of RM1 billion, executed in seven tranches over the next year, and funded through the group's internally generated funds while AAR and DSM shall hold 19.77 per cent and 0.23 per cent, respectively.
Press Metal group chief executive officer Tan Sri Paul Koon said the project represents a unique opportunity to drive sustainable long-term growth.
Besides expanding upstream business operations, he said the partnership with AAR and DSM also unlock synergies that will enhance the overall value of the group.
"This venture is an effective approach towards expanding our upstream presence while ensuring higher self-sufficiency and a stable supply of our alumina needs, which are critical to our core smelting operations. "This will also reduce our reliance on third-party suppliers and traders, ensuring greater operational resiliency and efficiency."With a long-term off-take agreement expected to commence once the refinery is operational, we anticipate cost savings that will further optimise our overall operations," he added.
The company's share price closed 0.8 per cent to RM4.80, giving it a market capitsalisation of almost RM40 billion.