Nusantara’s development to encourage better trade aiding smelters and East Malaysian ports

Nusantara is set to replace Jakarta as the capital of Indonesia, and an analyst panel has discovered that there are many potential clientele bases around Malaysian states, Sabah and Sarawak.  The research arm of Kenenga Investment Bank Bhd (Kenenga Research) stated that these two states are strategically positioned distant from China and provide an indestructible intra-Asia trade route.  

Kenanga Research quoted after its Sarawak and Sabah field trip: “In addition, they have also been earmarked as part of China’s Belt-and-Road Initiative.”

“Many global smelters are cutting their production as their operations have become barely profitable amidst elevated energy costs.”

“Press Metal Aluminium Holdings Bhd (Press Metal) and OM Holdings Ltd (OM Holdings) are spared given the stable cost of their energy source, namely hydropower.”

“In fact, prior to the recent surge in fossil fuel cost, by virtue of them using the cheaper hydropower, they already enjoyed significant cost advantage over their international competitors.

“With reduced production from fossil fuel-powered smelters in the world, the supply of end-products will remain tight, keeping their prices firm over the short term.”

The Kenenga Research team also reported that Press Metal might witness an aluminium smelting capacity of 320,000 tonnes per year yield for the whole financial year of 2022 owing to its Phase 3 upgradation commissioned last year, October 2021.

Om Holdings, Malaysia is now transforming its four ferrosilicon (FeSi) furnaces to form two manganese alloys (Mn Alloys) furnaces and two metallic silicon (MetSi) furnaces separately, as their end products are estimated to generate more revenue.

The Nusantara development might boost the performances of the smelters in the region as they would capitalise better due to affordable and green hydro power, Kenanga Research stated.

Suria Capital Holdings Bhd, a construction aid, would gain a lot of support from the seaports in Sabah, specifically the Tawau Port close to Nusantara, as it would be more accessible for the logistics department to carry in construction materials to build Indonesia’s new capital.

The Kenanga Research reports also magnified: “We understand local companies in Sabah and Sarawak have already received a deluge of enquiries from their potential new clients or partners in Indonesia.

“We gathered that the US$32.5 billion Nusantara project will kick start this month and will last another 15 to 20 years.”

“In addition, OMH has plans to add two more new Mn Alloys furnaces, increasing its total plant output to 610,000 to 640,000 MT per annum (from 470,000 MT per annum prior to the pandemic.”

Samalaju Industrial Port of Bintulu Port Holdings Bhd, a public limited company that provides port operations and bulking service, will experience increased throughput supported by a heightened aggregate output from the augmented production ratio of the prime industrial contenders in the Samalaju Industrial Park.