KUALA LUMPUR: Quarry operator Minetech Resources Bhd has allowed South Korea’s Asphalt Man International Co Ltd (AMI) to buy a 15% stake in its wholly-owned subsidiary Minetech Asphalt Man International Sdn Bhd (Mami) for RM1.7 million, effectively scrapping an earlier plan by AMI to acquire the entire unit.

In a filing with Bursa Malaysia, Minetech (fundamental: 0.95; valuation: 0.6) said it yesterday signed a joint-venture agreement with AMI to jointly manufacture, operate and manage its bitumen enamel plant in Hulu Yam, Selangor, and distribute bituminous products in Malaysia and overseas.

Under the deal, AMI will also acquire 720,000 shares or a 15% stake in Mami, and both parties will manage the company together. The decision was backed by Minetech’s belief in bitumen’s future demand growth.

“The tendency of world bitumen demand growth suggests that the bitumen consumption of developing countries in Asia will be increased as they are procuring their infrastructures to support their economic growth and foreign capital investment,” said Minetech.

Earlier this month, AMI had offered to acquire the entire equity interest in Mami for RM15 million, but Minetech executive director Matt Chin Leong Choy told The Edge Financial Daily in a recent interview that he preferred to form a collaboration than disposing of Mami for a one-off gain.

Minetech shares closed unchanged at 9.5 sen yesterday, with 11.39 million shares transacted, giving it a market capitalisation of RM63.18 million.

This article first appeared in The Edge Financial Daily, on January 21, 2015.