PMB Technology bets $133m on silicon-aluminium alloys amid mounting silicon metal losses

PMB Technology Bhd plans to invest MYR 650 million (USD 133 million) in a silicon-aluminium alloy plant at Samalaju Industrial Park in Sarawak, Malaysia, as the group seeks to diversify its operations following prolonged weakness in its silicon metal business.

The proposed facility is expected to be completed and begin commercial operations by the second quarter of 2027, subject to shareholder approval. The investment forms part of a restructuring plan that would redirect some of the group's existing power capacity towards silicon-aluminium alloy production while partially suspending silicon metal manufacturing.

The move comes as PMB Technology faces mounting financial pressure from weak silicon metal prices and sluggish demand. By expanding into silicon-aluminium alloys, the company aims to broaden its earnings base and reduce its reliance on a business affected by persistent oversupply and subdued downstream demand.

Power capacity shifts towards alloy production

The proposed plant will be located at Samalaju Industrial Park, where PMB Technology already operates silicon metal manufacturing facilities. According to the company's stock exchange filing, the diversification plan involves reallocating part of its long-term power supply to the production of silicon-aluminium alloys.

The company intends to optimise the use of its power allocation for energy-intensive manufacturing while adjusting its existing silicon metal operations. It has cited generally stable global demand for silicon-aluminium alloys, supported by low inventory levels and applications in clean energy, aerospace and automotive industries.

The proposed business will be led by Joyce Koon Hui Ginn, Leslie Koon Tzer Peng, Goh Chii Yew and Lim Hui Kien. AmInvestment Bank Bhd is acting as the principal adviser, while the investment remains subject to approval at an extraordinary general meeting.

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Silicon metal weakness weighs on earnings

The diversification plan follows a deterioration in PMB Technology's financial performance over recent years. The group recorded net profit of MYR 44.75 million (USD 10.95 million) in FY2023 before reporting a net loss of MYR 12.83 million (USD 3.14 million) in FY2025.

The pressure intensified in the first half of FY2026, when PMB Technology posted a net loss of MYR 48.16 million (USD 11.79 million), compared with a net profit of MYR 4.66 million (USD 1.14 million) in the corresponding period a year earlier.

The company has attributed the difficulties in its silicon metal business to structural industry oversupply and weak downstream demand. Foreign exchange movements also present an earnings risk, as most of the group's silicon metal sales are denominated in US dollars.

Against this backdrop, the proposed alloy facility is intended to diversify the group's operations. PMB Technology expects no immediate earnings impact from the proposal, although it believes the new business could contribute positively in the future.

The company is also taking a more selective approach to construction projects and may gradually reduce its construction activities, depending on the completion of existing projects, market conditions and the availability of suitable opportunities.

Shares retreat despite year-to-date gains

PMB Technology shares fell MYR 0.01 (USD 0.0024), or 0.59 per cent, to MYR 1.69 (USD 0.41) at Friday's midday break, giving the group a market capitalisation of approximately MYR 3.2 billion (USD 783.24 million).

Despite the session's decline, the stock remained up 45.69 per cent year to date.

The proposed MYR 650 million investment represents a strategic shift for the group as it seeks to reduce its dependence on silicon metal manufacturing. However, the plant's completion, commercial start-up and potential contribution to earnings remain subject to the proposed project's progress and shareholder approval.

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