KUALA LUMPUR: Press Metal Bhd rose as much as 11% after the firm signed a power supply term sheet with Syarikat Sesco Bhd, a wholly-owned subsidiary of Sarawak Energy Bhd (SEB).

The term sheet is for the supply of 500mw of power by Sarawak Energy to Press Metal’s proposed phase 3 aluminium smelter at the Samalaju Industrial Park, Sarawak.

At 5pm yesterday, Press Metal closed at RM3.42, up 31 sen or 10% with some 5.4 million shares traded, making the stock the third-largest gainer on Bursa Malaysia.

In a statement to Bursa yesterday, Press Metal said the company and Sarawak Energy would enter into exclusive negotiations for a long-term power purchase agreement for the 500mw, which both parties would conclude soon.

“We are grateful that SEB has entrusted us with an additional 500mw of power. This is another important milestone that enables us to expand our presence in the aluminium industry,” said Datuk Paul Koon, group chief executive officer of Press Metal.

With the additional power, Press Metal expects to double its smelting capacity for aluminium ingots in the proposed facility to 640,000 tonnes from the current 320,000 tonnes.

The expansion will bring Press Metal’s total smelting capacity to 760,000 tonnes.

Going forward, Press Metal expects its increased capacity to have a positive impact on earnings as the group anticipates aluminium consumption to increase, driven by higher uptake by the automotive industry amid economic recovery in the United States.

This article first appeared in The Edge Financial Daily, on November 20, 2014.