Press Metal optimistic about global aluminum prices
KUCHING: Metal Press Aluminum Holdings Bhd is optimistic about global aluminum prices going forward, given the expected growing demand for the product as the global economic recovery gathers pace.
Group chief executive Tan Sri Koon Poh Keong (pictured) said the global economic recovery is expected to continue, demand for aluminum will also increase, and therefore prices are expected to be kept at high levels.
He said the world price of aluminum has strengthened significantly in recent months to current levels of around US $ 2,400 (RM 9,907.20) per tonne, and that the completion of the new Phase 3 foundry of Press Metal as part of capacity expansion in Samalaju industrial park, Bintulu is timely.
The price of aluminum, according to Press Metal, began to recover in mid-2020 and returned to pre-Covid-19 levels in the fourth quarter of 2020 as global industrial production recovered from its larger contraction. early in the year.
The new foundry increases the group’s smelting capacity by 42% to 1.08 million tonnes per year, from 760,000 tonnes per year, thus consolidating Press Metal as the largest aluminum smelter in Southeast Asia.
âThe new phase (the smelter) has started production and we expect to be operating at full capacity by the third quarter of 2021,â Koon said in the company’s 2020 annual report. He said the group’s merger operations continued to operate at peak capacity despite movement restrictions due to the Covid-19 pandemic.
The high price of aluminum pushed Press Metal’s quarterly profits (the photo above shows a smelter) to an all-time high.
In the first quarter ended March 31, 2021 (T1FY21), the group’s after-tax profit climbed to around RM 258.6 million from RM 130.3 million in the first quarter of FY20, as the group’s income climbed to RM 2.1 billion from RM 1.83 billion in the first quarter of FY20, an increase of RM 271. 7 million or 14.8%.
For years to come, Koon said global aluminum supply will face challenges as decarbonization policies and environmental awareness limit the potential of any new aluminum supply.
Regarding the supply of key raw materials – alumina and carbon anode – to the group’s smelting operations at the Bintulu and Mukah factories, he said, Press Metal will be able to source a significant amount in-house. of its needs by the end of 2021.
âWe now have stakes in Australian and Indonesian alumina producers as well as an investment in the production of carbon anodes in Shandong. As a result, the dependence on third-party suppliers will be significantly reduced, ensuring the safety of raw materials for Press Metal’s smelting operations. he said.
As a reminder, Press Metal invested 80.2 million US dollars (331.07 million RM) for a 25% stake in PT Bintan Alumina Indonesia (PT BAI), which is building an alumina refinery.
The investment will provide the group with a long-term supply of alumina through the purchase of at least 50% of the alumina produced before the completion of the manufacturing plant and up to 1.5 million tonnes at l completion of the project.
PT BAI has started production from its Phase 1 refinery with a capacity of one million tonnes per year, and Press Metal expects the plant’s first alumina delivery next month. In early 2019, Press Metal acquired a 50% stake in Japan Alumina Associates (Australia) Pty Ltd (JAA), which owns a 10% stake in Worsley Alumina Unincorporated Joint Venture, one of the largest alumina producers and the cheapest in the world.
Thanks to this investment, Press Metal is entitled to a supply of 230,000 tonnes of alumina per year.
âThanks to our investments in JAA and PT BAI, the group will be able to guarantee up to around 80% of its alumina needs on the basis of an expanded melting capacity of 1,080,000 tonnes per year.
“This will serve to improve the stability of our group’s aluminum operations by reducing dependence on third party suppliers and protecting us from supply disruptions,” Press Metal said in the discussion and analysis of management in the annual report.
Press Metal, through a partnership with Sunstone Development Co Ltd, established Shandong Sunstone & PMB Carbon Ltd Co to manufacture prebaked carbon anodes, a primary consumable for the group’s smelting operations.
Sunstone’s annual capacity is 300,000 tonnes and is now in full production.
Press Metal has the right to purchase up to 160,000 tonnes per year with an option to purchase an additional 60,000 tonnes of the plant’s total annual production capacity. The investment allows Press Metal to guarantee around 40% of its increased needs.
Koon said Press Metal is also committed to meeting environmental, social and governance (ESG) standards through several initiatives and recently committed to being âcarbon neutralâ by 2050 across all of its subsidiaries. business and operations.