This article first appeared in The Edge Financial Daily on February 20, 2019

KUALA LUMPUR: News on late Monday that the government has decided not to extend the ban on bauxite mining activities in Kuantan beyond March 31 lifted the shares in two companies tied to the industry.

The decision by Putrajaya marks the end of a moratorium on the mining of the ore, used to produce aluminium, which has lasted over three years since it was first imposed on Jan 15, 2016.

Shares in WZ Satu Bhd, which is involved in bauxite mining in Pahang, rose as much as 25% yesterday.

The counter opened up eight sen at 40 sen, before paring some gains to close at 36.5 sen, still up 4.5 sen or 14.06% from Monday. The group’s market capitalisation stands at RM169.79 million.

According to its financial results for the year ended Aug 31, 2016, WZ Satu could earn some RM3 million in profit after tax each quarter from the full operation of its bauxite mining business.

Last year, WZ Satu officials told the media that the group had “several hundred thousand tonnes of bauxite sitting at the port now, waiting to be exported”.

It was recently reported that a total of 435,000 tonnes of the mineral was still kept in the storage areas in Kuantan Port and Kemaman Port.

However, they must be cleaned before being allowed for export, in accordance with the new standard operating procedure (SOP) upon the end of the export ban.

Meanwhile, shares in IJM Corp Bhd also rose. The group owns 60% of Kuantan Port, through which some of the bauxite is exported.

The counter rose 10 sen or 5.56% to close at its intraday high of RM1.90 with 5.05 million shares traded, giving it a market capitalisation of RM6.91 billion.

Kuantan Port handled 17.03 million freight weight tonnes in its financial year ended March 31, 2018. This compares with 38.8 million tonnes in FY16 when the bauxite export from the port was at its peak.

Separately, shares in Press Metal Aluminium Holdings Bhd closed six sen or 1.45% lower at RM4.08, after falling as much as eight sen earlier, in anticipation of a larger global aluminium supply after the moratorium expires.

At its last close, the metal manufacturer has a market capitalisation of RM16.16 billion.

It was reported that Malaysia shipped over three million tonnes of bauxite a month at the end of 2015.

Bernama reported that the industry is set to resume due to the lucrative returns to the Pahang government — up to RM47 million in royalty in 2015 alone — although it will undergo more stringent SOPs “to preserve the environment”.

However, Kuantan member of parliament Fuziah Salleh has called upon Putrajaya to be 100% sure that the lifting of the moratorium will not cause previous environmental problems to reoccur in the area, such as pollution of heavy metals from the bauxite mine to surrounding rivers and bodies of water, Free Malaysia Today reported.