SALCO Smelter’s Community Engagement Begins

Monday, 24 September 2007, Bintulu -- Sarawak Aluminium Company’s (SALCO) programme of community engagement for the proposed aluminium smelter project began last week with a dialogue held in Bintulu on Friday.

Hosted by the Resident of Bintulu, Dr Razali Abon, the dialogue saw over 40 residents representing a cross-section of the local community - from associations and the business community, local community heads and government departments - meet for the first time with the team from Rio Tinto Aluminium and CMS.

The dialogue, which lasted over 2 hours, addressed questions about the project, on RTA and its experience in developing and operating aluminium smelters, on safety & health concerns and future business opportunities related to the proposed aluminium smelter.

Among those present to answer questions and comments were RTA’s Matt Liddy (GM, Smelter Project Development), Alan Irving (Rio Tinto’s Principal Adviser for Environment), Angus Green (RTA’s consultant specializing in communities) and its External Affairs team. CMS’ team was led by Dato’ Richard Curtis (Group MD) and Isaac Lugun (Head of Similajau Development SBU).

The dialogue was the first of a series of events to be held under SALCO’s community engagement programme which is targeted towards providing the local community with information about the smelter project.

The proposed location of the SALCO smelter will be at Similajau, approximately 60 km from Bintulu town. Due to its proximity, it is expected that many resources and services, including employment, will come from Bintulu.

The previous week had been a busy week for the RTA and CMS teams on the SALCO smelter project. On Monday, 17 September 2007, an announcement was made on the appointment of 2 groups of consultants to begin the Detailed Environmental Impact Assessment (DEIA) study. On Wednesday, 20 September 2007, RTA and CMS met with non-governmental organization, the Malaysian Nature Society’s Kuching Branch, to gain a better understanding of the wildlife activities and concerns in the Similajau area.

SALCO smelter project gains momentum

Tuesday, 9 October 2007, Kuching: The proposed US$2 billion aluminium smelter project is making more progress, with the appointment of prominent international engineering consultant Bechtel to undertake an engineering study, and the allocation of a parcel of State-owned land by the Sarawak Government at Similajau, near Bintulu.

The appointment of Bechtel comes close on the heels of the appointment of Chemsain Konsultant Sdn Bhd (Chemsain) and URS Australia Pty Ltd (URS) to conduct the EIA for the smelter project, which has been identified as the catalyst for the development of Sarawak’s central regional economic growth corridor.

“The allocation of land, commencement of the EIA and the appointment of Bechtel for the engineering study take this significant project to another level, bringing it closer to realization,” said Rio Tinto Aluminium’s General Manager Smelter Project Development Matt Liddy.

Malaysian Main Board-listed conglomerate, Cahya Mata Sarawak (CMS) and global aluminium producer, Rio Tinto Aluminium (RTA) recently signed a Heads of Agreement to commence feasibility studies for the development of a world class aluminium smelter in Similajau, which will be known as Sarawak Aluminium Company (SALCO). The signing, held in Kuching in August 2007, was witnessed by the Chief Minister of Sarawak.

The proposed SALCO aluminium smelter is expected to generate 4,700 direct and indirect jobs as well as billions of Ringgit to the Malaysian economy annually.

According to Matt Liddy, who is based in Kuching, the purpose of the engineering study is to make a detailed cost estimate of all the factors needed to construct the smelter.

The study will also provide the design for the layout of the smelter, identify options to allow for future expansion of the smelter and estimate the size of the workforce needed.

“We are pleased with the appointment of Bechtel as the engineering consultant for this study. Bechtel has built the majority of the world’s aluminium smelters and we are glad to have their expertise on board for the project,” Mr Liddy said.

“Bechtel provides technical, management, and directly related services to develop, manage, engineer, and build aluminium facilities worldwide. Current major Bechtel projects in the aluminium industry include the 360,000 tonnes per year Sohar smelter, under construction in Oman, which includes the world’s longest potline.

“Bechtel also constructed both the initial phase and the expansion of RTA’s Boyne Smelter in Gladstone, Australia. The 550,000 tonnes per year smelter is situated adjacent to the world heritage listed Great Barrier Reef and has spurred on the development of the local community that is now home to around 10,000 people, with the nearest residents located just 400 metres from the smelter.”

Matt Liddy said the feasibility studies would take approximately 12 to 15 months to complete and construction of the smelter could begin in early 2009.

The proposed smelter, to be located in Similajau, 60 kilometres from Bintulu town, would have an initial production capacity of 550,000 tonnes per year, with the capability to be expanded to 1.5 million tonnes. First production from the smelter is targeted for the fourth quarter of 2010. It is proposed that electricity for the smelter will come from the Bakun Hydroelectric Dam, which is currently under construction.

The expertise and credentials of RTA and CMS will greatly boost SALCO’s ability to ensure world class smelting operations.

“RTA and CMS are committed to developing a world class aluminium smelter that meets international standards with regard to environmental, health and safety that the two companies and Malaysia can be proud of,” Matt Liddy said.

”The smelter will adopt leading engineering standards and practices based on RTA’s world class practices used in its mining, refining and smelting operations.”

Sarawak Aluminium Company
Rio Tinto Aluminium Limited (RTA) and Cahya Mata Sarawak (CMS) are undertaking studies to develop an aluminium smelter in Sarawak, which will be known as Sarawak Aluminium Company (SALCO). RTA owns bauxite mines, alumina refineries and aluminium smelters, and has extensive experience in the design, engineering, construction, commissioning and operation of world class aluminium smelters. An aluminium smelter converts alumina into aluminium metal. The alumina for the Sarawak smelter would be sourced from RTA.

Bechtel
Bechtel is one of the world’s premier engineering, construction, and project management companies, with annual revenues in excess of US$20 billion. 40,000 employees are teamed with customers, partners, and suppliers on a wide range of projects around the globe. Over the last 100 years, Bechtel has completed more than 22,000 projects in 140 countries, specializing in the design and construction of highly complex, first-of-a-kind, and remote facilities around the world.

RM7b smelter to start ops in 2010

The Star

Wednesday August 8, 2007

KUCHING: The proposed US$2bil (RM6.9bil) aluminium smelter to be built by the Cahya Mata Sarawak Bhd (CMSB)-Rio Tinto Aluminium joint venture in Bintulu is expected to come on stream in late 2010.


It would have an initial production capacity of 550,000 tonnes a year, and the capability to expand to 1.5 million tonnes per annum later, Rio Tinto chief executive Oscar Groeneveld told reporters.

The smelter would, in its first stage operation, require 900MW of electricity, which would be sourced from the 2,400MW Bakun hydroelectric dam project now under construction.

“We have to start negotiations soon on the purchase price of the Bakun power,” Groeneveld said after the signing of a heads of agreement between Rio Tinto and CMSB here yesterday.

Rio Tinto was represented by managing director (smelting) Sandeep Biswas and general manager (smelter project development) Matt Liddy while group managing director Datuk Richard Curtis and deputy group managing director Syed Ahmad Alsree Alwee signed on behalf of CMSB.

Sandeep Biswas (left) exchanging documents with Datuk Richard Curtis. With them are (from left) Penny Williams, Oscar Groeneveld, Tan Sri Abdul Taib Mahmud and CMSB group chairman Tan Sri Sayed Anwar Jamalullail

Sarawak Chief Minister Tan Sri Abdul Taib Mahmud and Australian High Commissioner to Malaysia Penny Williams witnessed the ceremony.

Rio Tinto and CMSB will have 60:40 equity interest in the joint venture, Sarawak Aluminium Co (Salco).

Curtis said CMSB would be raising long-term funding locally and in the international capital market to finance its investment in the project.

Salco will carry out detailed feasibility studies on the design, engineering, construction, commissioning and operation of the smelter project.

The studies, which will take between 12 and 18 months, will examine the technical, environmental, operational, social and economic aspects of the project, to be sited in Similajau, 80km from Bintulu.

Earlier, Groeneveld cited an independent study which said the project had the potential to generate RM3bil a year to Malaysia’s gross domestic product at current prices for the metal.

“On a per capita basis, consumption of aluminium in Asia is currently low but growing rapidly. A smelter in Malaysia is well poised to take advantage of this growth.”

Groeneveld said the raw materials for the proposed smelter would be imported from Rio Tinto's refinery in Queensland, Australia.

Posted by hmtipol at 12:27 AM

08-10-2007: MUI counters up on turnaround story

KUALA LUMPUR: The MUI group has stirred some interest lately, with several counters surging in active trade on market expectation of the group turning around to be on stronger financial footing.

Last Friday, Malayan United Industries Bhd (MUIB) surged 13 sen or 6.8% to 50 sen, the highest since April 22, 2002 when it also closed at 50 sen. On Friday, it was the volume leader with 143.38 million shares transacted.

Pan Malaysia Industries Bhd (PMI), which holds 46.56% of MUIB, jumped two sen to 10 sen, while MUI’s 68.17%-owned Pan Malaysia Holdings Bhd (PM Holdings) rose eight sen to 26 sen. MUI Properties Bhd rose 4.5 sen to 28 sen.

Industry observers said there could be a turnaround story in MUI group, especially MUIB, as it gets back on a stronger financial footing through its restructuring to pare down its debts to RM1.4 billion as at June 30, 2007 from RM3.5 billion in 2003.

The disposals involved sale of assets including MUI Plaza headquarters in Kuala Lumpur, equities in Malaysian-listed companies and overseas assets including hotels and insurance business.

MUIB had been out of analysts and investors’ radar screen over the past 20 years. In the early 1980s, it was trading as high as RM24 per share.

Currently, the group is in the final stage of its group-wide restructuring, with the last company in the group being PMI. In October last year, PM Holdings and MUI’s indirect associate Pan Malaysia Capital Bhd regularised their financial conditions.

PMI had in mid-September proposed to dispose of a 26.5% stake in MUIB or 515.4 million shares for RM154.6 million under a restricted offer for sale (ROS) to reduce its RM190 million debts.

PMI holds 46.56% comprising 903.49 million MUIB shares and under the corporate exercise, it would sell 26.5% of its MUIB stake or 515.4 million at 30 sen apiece.

MUIB is controlled by a low-profile Tan Sri Khoo Kay Peng, who owns 48.52% or 941.49 million shares in MUIB. Khoo and companies controlled by him have indicated their willingness to fully subscribe to any unsubscribed offer shares under the ROS.

The observers said PMI’s exit from Practice Note 17 would enable Khoo to consolidate the diversified businesses of the once high-flyer MUIB and PMI -- both which had been largely ignored by investors -- under MUIB ultimately.

PMI’s main asset was the MUIB stake after it sold its main asset, comprising 91.06% interest in Metrojaya Bhd (MJB), which reduced its borrowings to RM190 million. After the sale, PMI does not have any core business.

“Companies under the group could be consolidated to enhance their value with MUIB being the ultimate holding company,” said an industry observer, adding there were too many listed underperforming companies in the group.

They also said MUIB has been reducing its losses. In the second quarter ended June 30, 2007, the net loss was RM6.79 million compared with RM16.07 million a year ago. Net asset per share was 42.14 sen.

In the second quarter, MUIB had repaid RM105.49 million in borrowings, reducing its debts to RM912.71 million. Despite the repayment, as at June 30, 2007 it still had assets totalling RM2.82 billion and cash and cash balances of RM533.51 million.

After the acquisition of the Metrojaya stake from PMI, MUIB is expecting its retailing division to be further strengthened and would contribute to group revenue and earnings.

Industry observers said MUIB’s UK retailing operations under Laura Ashley Holdings plc had reported encouraging growth in its sales and margins while Metrojaya was profitable.

According to Laura Ashley’s latest earnings for the 26 weeks to July 28, 2007, it recorded sales of £113.9 million (RM793 million) while profit before taxation was £6.4 million.

“When the MUIB loans are taken care of, we will see an increase in the value of the group,” said an observer, adding that the company could be in the black by 2009.