OM Sarawak plans RM61mil plant
Bintulu sinter plant expected to be operational in the second quarter next year
KUCHING: OM Materials (Sarawak) Sdn Bhd (OM Sarawak), which owns a ferrosilicon and manganese alloys smelting plant in Samalaju Industrial Park, Bintulu, will invest about A$20mil (RM61mil) in a sinter plant project.
The proposed plant, which will have a production capacity of 250,000 tonnes per annum, is expected to be operational in the second quarter of 2019 (2Q19), according to ASX-listed OM Holdings Ltd (OMH).
OMH owns 75% stake in OM Sarawak, with its joint venture partner Cahya Mata Sarawak Bhd (CMS) holds the balance 25% equity interest.
The smelting plant has a production capacity of 200,000 tonnes to 210,000 tonnes per annum of ferrosilicon alloys and 250,000 tonnes to 300,000 tonnes per annum of manganese alloys.
On-site sinter production has synergies with OM Sarawak’s manganese tailing retreatment and contributes to cost savings in raw material, OMH said in its latest investors’ presentation in conjunction with the release of its third-quarter results ended Sept 30, 2018 (3Q18).
OMH is investing A$12mil in a tailing retreatment plant project with ore fine production of 250,000 tonnes per annum. The plant is scheduled for pre-delivery commis- sioning at the company’s contractor facility in South Africa in January 2019 before shipment to Australia. Commissioning of facilities at OMH Bootu Creek, Australia is scheduled in 2Q19.
According to OMH, a sinter plant would fit into the group’s activities as the plant would get together iron ore dust with other fine materials at high temperatures to create sinter for use in blast furnaces.
Subsidiary OM (Qinzhou) Co Ltd currently owns a sinter plant in Guangxi, China with an annual capacity of 300,000 tonnes.
Reviewing the operating performance of OM Sarawak’s smelting plant, OMH said all the 16 units of 25.5 megavolt-ampere furnaces under phase one were in full production in 3Q18. Nine of the furnaces produce standard grade ferrosilicon, one producing refined ferrosilicon and the remaining six furnaces producing manganese alloys.
Ferrosilicon production volume rose by 11% to 58,121 tonnes from 52,171 tonnes in 2Q18 with the commencement of production from the final furnace in June
However, the plant’s production volume of manganese alloys fell by about 9% to 55,628 tonnes from 61,229 tonnes during the same period due to the development and production of higher grades of manganese alloys as demanded by the market. These grades command a premium but require more power to produce.
“The plant successfully produced a premium grade of SiMn (low carbon silicomanganese) during 3Q18, thus expanding the product mix offerings and elevating OM Sarawak’s position to one of the few ferroalloy producers capable of supplying in bulk this strategic resource for the stainless steel industry,” said OMH.
During the quarter under review, the ferrosilicon furnaces achieved an average daily production output of about 64 tonnes per furnace. The production have consistently exceeded the furnace design capacity of 55 tonnes per furnace per day since 1Q16.
“The SiMn and high carbon ferromanganese (HCFeMn) furnaces have also outperformed their respective furnace design capacity of 100 tonnes of SiMn and 150 tonnes of HCFeMn per furnace per day, with average daily production output achieved of 102 tonnes and 152 tonnes respectively for 3Q18.”
In 3Q18, OM Sarawak raised the sales of ferrosilicon by 37% to 61,179 tonnes from 44,766 tonnes in 2Q18 while the sales of manganese alloys rose by 6% to 57,097 tonnes from 53,782 tonnes during the same period.
OMH attributed the higher sales mainly to strong ferroalloy demand.
OM Sarawak has recently secured an additional 50MW, bringing total supply from Sarawak Energy Bhd (SEB) to 350MW to support its smelter’s high production rates. It is seeking an additional 100MW, which according to OMH, has been agreed in principle but is subject to the necessary approvals.
OM Sarawak has signed a 20-year fixed-escalation power tariff with SEB, which supplies green and renewable energy from its Bakun hydro-electric dam (2,400MW) and Murun dam (944MW) to energy-intensive industries in Samalaju Industrial Park. Another major dam in Baleh will generate 1,285MW when commissioned by 2025 to beef up supply to heavy industries in the Sarawak Corridor of Renewable Energy.
With hydro-power, OMH said OM Sarawak had a competitive advantage over marginal producers in China which operate on higher costs of electricity, the main cost component in smelting operations.
“OM Sarawak has a cost advantage over current marginal suppliers, even without Chinese export duty.” China is the world’s leading producer of ferrosilicon and one of the dominant producers of manganese alloys.