KUALA LUMPUR (Nov 15): Press Metal Aluminium Holdings Bhd today inked an agreement to take up a 25% stake in PT Bintan Alumina Indonesia (PT BAI) for US$80.23 million (RM333.36 million).  

The two companies had on May 31 signed a memorandum of understanding to negotiate the acquisition of the stake, Press Metal — South East Asia’s largest aluminium smelter — said.

PT BAI is building a million-tonne alumina refinery plant in Indonesia’s Bintan island, with plans for a second phase. 

This, it said, will provide Press Metal with a long-term supply of alumina via the purchase of not less than 50% of alumina produced before completion of the project, and up to 1.5 million-tonnes upon completion of the project. 

With this, reliance on third-party suppliers for alumina needs will reduce considerably, providing stability for Press Metal’s smelting operations, Press Metal added.   

“Together with our earlier acquisition of Worsley, we will be able to cover approximately 80% of our enlarged alumina requirements, moving forward,” said Press Metal group chief executive officer Tan Sri Paul Koon in a statement. 

“This will strengthen us vertically and provide us an edge, as we remove some uncertainties or supply constraints, which could lead to operational disruptions,” Koon said.

“This is vital, as we are now growing our smelting operations and our new smelter (in Samalaju, Sarawak) is targeted to commence end [of] next year. 

“The location of this asset is in closer proximity to Samalaju as compared to sourcing from Australia, and will enable us to enjoy shorter lead-time and capture considerable logistic cost savings,” he added.   

Press Metal said the US$66.23 million of purchase consideration will be secured through bank borrowings, and the remaining US$14 million via internally-generated funds.  

Shares of Press Metal closed one sen or 0.21% higher at RM4.77, bringing a market capitalisation of RM19.26 billion.