KUALA LUMPUR (Sept 18): Press Metal Aluminium Holdings Bhd (KL:PMETAL) said it has teamed up with three Indonesian companies to operate an alumina refinery plant in West Kalimantan, Indonesia.

The plant is expected to have an annual production capacity of one to 1.2 million tonnes under the first phase, with a potential expansion to double this output. The total cost for phase one is US$750 million (RM3.24 billion), to be funded via equity and loans, the group said in a statement.

Press Metal, which is Southeast Asia's largest aluminium smelter, said the three Indonesian companies roped in for the planned investment are PT Alakasa Alumina Refineri (AAR), PT Dinamika Sejahtera Mandiri (DSM) and PT Kalimantan Alumina Nusantara (KAN).

AAR is an investment holding company based in Jakarta, while DSM is involved in bauxite mining activities in Sanggau, West Kalimantan.

KAN, meanwhile, is a domestic limited liability company located in Jakarta. Based on its latest audited financial statements for the financial year ended Dec 31, 2023, its net assets stood at 10.95 billion rupiah while the loss after taxation was 54.57 million rupiah.

KAN will establish and operate an integrated alumina refinery plant, power plant, jetty and supporting infrastructure in Sanggau, said Press Metal, adding that the Malaysian group will subscribe for an 80% equity interest in KAN for RM1.04 billion, executed in seven tranches over the next year and funded through the group’s internally generated funds.

AAR will subscribe for a 19.77% stake in KAN while DSM will take up the remaining 0.23%.

Press Metal Group CEO Tan Sri Paul Koon said the project represents a unique opportunity to drive sustainable long-term growth.

“By partnering with AAR and DSM through this joint venture, we are not only expanding our upstream business operations but also unlocking synergies that will enhance the overall value of the Press Metal group,” Koon said.

In addition, Koon said the venture is an effective approach to ensuring higher self-sufficiency and a stable supply of its alumina needs, which are critical to its core smelting operations.

“This will also reduce our reliance on third-party suppliers and traders, ensuring greater operational resiliency and efficiency. With a long-term offtake agreement expected to commence once the refinery is operational, we anticipate cost savings that will further optimise our overall operations,” he said.

Press Metal’s share price closed down four sen or 0.8% to RM4.85 on Wednesday, bringing the group a market capitalisation of RM39.96 billion.