Syed Mokhtar-linked firm in US$1b tie-up

 

GIIG Holdings Sdn Bhd, controlled by Tan Sri Syed Mokhtar Al-Bukhary, has roped in Aluminium Corp of China Ltd (Chalco) to co-own and build an aluminium smelter costing over US$1 billion (RM3.44 billion) in Sarawak.

Chalco is among the world's five largest producers of aluminium. It is listed on three global bourses, including the New York Stock Exchange and the Hong Kong Stock Exchange.

GIIG is looking for another local partner for the smelting plant in the Samalaju Industrial Park in Bintulu.

"The project will be co-owned and developed by three parties. We are in discussion with several parties," GIIG director Shahrir Shariff said.

The equity structure will be fixed after the power purchase agreement (PPA) is concluded with Sarawak Energy Bhd.

The power pact is for the supply of 600 megawatts from the Bakun hydroelectric dam to fuel the smelter.

"The key to finalising the equity structure and the entire project is the PPA. We hope to finalise the PPA by June this year, and the plant itself should be ready within three years after the PPA is signed," Shahrir said.

Chalco will provide technical expertise and will not take a majority stake in joint-venture company Smelter Asia Sdn Bhd, he added.

The majority stakes will be held by GIIG and another local company, Shahrir said after the signing of the agreement between GIIG and Chalco in Putrajaya yesterday.

The event was witnessed by Prime Minister Datuk Seri Najib Razak and former prime minister Tun Dr Mahathir Mohamad.

Najib said the project reflects the confidence of the Chinese government and investors in the country, particularly in Sarawak.

It could also be a catalyst in the development of the Sarawak Corridor of Renewable Energy.

"I hope this marks a recovery in the economy this year. Many more foreign investments should be flowing into our country," he said.

On whether there was still room to locate large smelting plants in Sarawak, Najib said: "Two licences have been given out.

"That is the level of commitment by the government. We just have to work out the supply of power."

Meanwhile, Shahrir said that GIIG Holdings and Chalco were looking at raising up to 70 per cent of the project's financing through local and foreign loans.

The balance of 30 per cent would come from shareholders.

The smelting plant will be able to produce 330,000 tonnes initially. This production capacity could later be increased to 1.25 million tonnes at a later stage.

"Aluminium Corp of China (Chalco) has been given the option to take up the entire production capacity of the smelter, but we would like to supply some to cater for local demand later," Shahrir said.