Malaysia' Press Metal (8869) inked an agreement to subscribe 25 percent equity interest in PT Bintan Alumina Indonesia (BAI) for US$80.23 million - Photo by Galang Batang SEZ

JAKARTA (TheInsiderStories) – Malaysia’ Press Metal (8869) inked an agreement to subscribe 25 percent equity interest in PT Bintan Alumina Indonesia (BAI) for US$80.23 million, said the company on Nov. 15.  BAI is involved in the production of alumina and in the midst of constructing a 1 million tons (MT) per annum in Galang Batang Special Economic Zones (SEZ) in Bintan, Riau Island.

Its targeting the alumina refinery plant will start production in December 2020. The local company also planned to build another plant to rise the production to 2 MT of alumina in the coming year.

With the deal, Press Metal has secured a long-term supply of alumina by purchase around 50 percent of BAI production before completion of the project and up to 1.5 million-ton after the project completed. In the first quarter of 2021, BAI targets to export 1 MT of alumina and will created revenues $350 million.

“This is an exceptional opportunity for us to invest in a refinery which will enable us to secure supply for our alumina needs. Together with our earlier acquisition of Worsley (Alumina Unincorporated), we will be able to cover approximately 80 percent of our enlarged alumina requirements moving forward,” said Group CEO Tan Sri Paul Koon in an official statement.

On February 2019, its unit, Press Metal Bintulu Sdn. Bhd, together with Japan’ Sumitomo Corp. has acquired 50 percent of the interest in Japan Alumina Associates (Australia) Pty. Ltd., which has a 10 percent interest in the Worsley Alumina from ITOCHU Minerals & Energy of Australia Pty. Ltd.

The Australian mine is an integrated project that consists of two operations in the south west of Western Australia, a bauxite mine near Boddington and an alumina refinery near Collie. The project has a production capacity of 4.6 MT of alumina per year.

The indirect interest held by the subsidiary, said the company will provide to access the annual production of the Worsley Alumina project, which amounts to approximately 230,000 MT of alumina. It said, with the deal the reliance on third party suppliers for alumina needs will reduce, providing stability for the company’ smelting operations.

Koon adds, the agreement is vital, as Press Metal now growing their smelting operations and the new smelter is targeted to commence end of 2020. Beside, he asserted, the location of this asset is in closer proximity to Samalaju Industrial Park in Serawak Malaysia, the site of the company’ smelter, compared to sourcing from Australia.

Koon noted: “This will enable us to enjoy shorter lead-time and capture considerable logistic cost savings.”

The Galang Batang is located at Bintan Island, Riau, which is the center of the Malacca Straits choke point, adjacent to the Batam Free Trade Zone and the Philip Strait. The SEZ location has direct access to the Malacca Strait and the South China Sea.

The zones was proposed by BAI and was established through Government Regulation Number 42 of 2017, which was promulgated on Oct. 12, 2017. Galang Batang will be developed as a center for the mineral processing industry of mining products (bauxite) and its derivative products both from the refinery and from the smelter process.

The investment value of the SEZ development is Rp36.25 trillion ($2.59 billion) for six years. Until August, the local manufacturer has realized an investment of Rp5 trillion in the projects.  

Managing director of BAI, Santoni, said funds was used to build an alumina refinery plant, gas plants, ports with multipurpose piers 2 x 35,000 deadweight tonnage (DWT) and barges piers 4 x 10,000 DWT, as well as the basic infrastructure of the region.

As is known, the Galang Batang is stipulated through Government Regulation No. 42 of 2017 and its expectingable to absorb a workforce of 23,200 peoples. BAI has controlled 1,750 hectares of land from the target of 2,333 hectares.

In the SEZ areas to build refining of bauxite ore into alumina with a capacity of 2 MT per year, processing alumina into aluminum ingot with a capacity of 1 MT every year, the development of power plants and the development of loading and unloading ports.

“To support the operations of these alumina processing plants, we will gradually build a 2,000 megawatts power plant in stages until the third phase. All investment funds from BAI itself, “said Santoni.

The Galang Batang development was carried out in three stages of development. Phase I, the period of 2016 – 2020 is the stage preparation into an industrial base, cooperation and partnerships, developing the processing industry, improving infrastructure and logistics, and other things needed.

Phase II, the period 2020 – 2026 is directed at the development of the alumina refinery and smelter derivative industry plot, including the manufacturing industry, the automotive industry, and other alumina-based industries, and other supporting facilities.

While in phase III, 2026 – 2030, is the final stage of the development of the zones, which is directed to complete all the necessary facilities in accordance with the master plan.

US$1: Rp14,000

By Linda Silaen, Email: linda.silaen@theinsiderstories.com