Perwaja to build iron ore pelletisation plant

Perwaja Holdings Bhd, an integrated producer of primary steel products, will invest RM400 million to build the country's first iron ore pelletisation plant to reduce dependency on imported
iron ore.

Executive chairman Tan Sri Abu Sahid Mohamed said the plant, to be built in two phases, will have a total annual production capacity of 2.4 million metric tonnes when both phases are completed.

The first phase will begin in the first quarter next year and is scheduled for completion before end of 2012, he told reporters after the signing of contract agreement between Perwaja Steel Sdn Bhd and Sinosteel Equipment and Engineering Co Ltd in Kuala Lumpur today.

The US$65 million contract has been awarded to Sinosteel Equipment and Engineering, which will design and build the concentration and pelletising plant at Perwaja's manufacturing site in Kemaman, Terengganu.

Abu Sahid said the new production capacity will be able to meet 80 to 90 per cent of the company's need and able to save more than 15 per cent of production cost.

Currently, Perwaja and other direct reduced iron plants in Malaysia import 100 per cent of iron ore pellets from overseas. The price of iron ore has increased significantly from US$110 per metric tonne to US$220 per metric tonne this year.

In addition, the company is also looking for a joint venture with the Terengganu state government to get a regular supply of iron ore, which from the state alone amounted to a deposit of about 40 million tonnes, Abu Sahid said.

'We have submitted our application to the state government for a joint venture. Terengganu has quite a substantial deposit of iron ore, and instead of exporting it without added value, why not a joint venture?' he said.

The company is looking at a concession kind of agreement with the state government and in return, it will offer some kind of equity stake in the plant to the state government, Abu Sahid said.

Asked whether the company was interested in other state governments like Pahang and Kelantan, which also have iron ore mines, for a similar agreement, he said the company was open to the idea.

Abu Sahid said local mining areas which had been identified as sources included Bukit Besi in Terengganu and Bukit Iban, Lipis, Maran and Lanchang in Pahang as well as Kelantan, accounted for about 100 million tonnes of iron ore
reserves.

Currently, local iron ore is being exported at US$80 per metric tonne but it will be imported back as pellets at US$220 per metric tonne, he said. -- Bernama

Perwaja returns to the black

Perwaja Holdings Bhd returned to the black with a pre-tax profit of RM10.3 million in the second quarter ended June 30, 2010 from a pre-tax loss of RM94.9 million in the same period last year.

The group's revenue increased 7.6 per cent to RM465.2 million from RM432.3 million previously.

For the first six months ended June 30, 2010, the revenue and pre-tax profit were higher at RM838.9 million and RM32.9 million respectively compared with a revenue of RM750.8 million and and pre-tax loss of RM168.2 million in the same period last year.

In a filing to Bursa Malaysia today, Perwaja said the group's financial performance for the first half year has been satisfactory, supported by the positive rise in steel prices and healthy domestic and regional demand, although tampered by the higher cost of raw materials.

'In view of the volatility in iron ore price, the group will adopt a prudent approach going forward and will monitor the price fluctuations closely while fine-tuning its inventory stocking strategy,' it added. -- Bernama