KUALA LUMPUR (May 31): Asia’s largest aluminium smelter Press Metal Aluminium Holdings Bhd has entered into a memorandum of understanding with PT Bintan Alumina Indonesia (PT BAI) and its direct and indirect shareholders, comprising Shandong Nanshan Aluminium Co Ltd, Redstone Alumina International Pte and PT Makhota Karya Utama, to negotiate a proposed acquisition of a 25% stake in PT BAI. 

In a bourse filling, Press Metal said the proposed investment would allow the group to secure long-term alumina supply, as PT BAI is currently building a million-ton alumina refinery plant, along with the necessary facilities in Galang Batang in Riau Islands province, Indonesia, with plans for a second phase. 

The subscription in PT BAI is subjected to completion of the necessary due diligence and agreement on the final terms and conditions of the subscription. 

The investment came on top as the group is actively seeking various expansion opportunities, which may include investment into the group’s existing business and/or complementary business, it added. 

In a statement accompanying the filing, Press Metal’s group chief executive officer Tan Sri Paul Koon commented: “We are constantly on the lookout for suitable assets to strengthen our position as a globally-integrated aluminium corporation. We are excited about the synergistic benefits of this opportunity to Press Metal, as it allows us to secure a substantial portion of our long-term alumina needs. We are still in discussions and the final terms are yet to be determined. 

Press Metal is still on an expansion mode and has the intention to tap into the debt market to fund its growth, Koon added.

“Our current net gearing is at a reasonable level. The capital injection for this asset is progressive in nature and therefore, our gearing will continue to be manageable with our anticipated strong cash flow,” he said in a separate statement. 

Shares of Press Metal finished unchanged at RM4.48 today, valuing it at a market capitalisation of RM18.03 billion.

It saw some 1.50 million shares traded.