Press Metal teams up with Indonesian firms for its upcoming alumina refinery in West Kalimantan

Press Metal Aluminium Holdings has announced a partnership with three Indonesian firms to establish and operate an alumina refinery in West Kalimantan, Indonesia. The refinery is projected to produce between one and 1.2 million tonnes annually in its first phase, with plans to double this capacity.

"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," said Press Metal Group CEO Tan Sri Paul Koon.

About the project

The project's first phase will cost an estimated US$750 million (RM3.24 billion) and will be financed through a combination of equity and loans. Press Metal, the largest aluminium smelter in Southeast Asia, is collaborating with PT Alakasa Alumina Refinery (AAR), PT Dinamika Sejahtera Mandiri (DSM), and PT Kalimantan Alumina Nusantara (KAN) on this investment.

AAR is an investment holding company based in Jakarta, while DSM is engaged in bauxite mining in Sanggau, West Kalimantan. KAN, a domestic limited liability company based in Jakarta, reported net assets of 10.95 billion rupiah and a post-tax loss of 54.57 million rupiah in its latest audited financial statements for the year ending Dec 31, 2023.

"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," added Koon.

Upcoming alumina refinery

According to Press Metal, KAN will develop and operate an integrated alumina refinery, including a power plant, jetty, and supporting infrastructure in Sanggau. The Malaysian company will acquire an 80 per cent equity stake in KAN for RM1.04 billion, to be paid in seven tranches over the next year, using internally generated funds. AAR will take a 19.77 per cent stake, while DSM will hold the remaining 0.23 per cent.

Press Metal Group CEO Tan Sri Paul Koon stated that the project offers a unique opportunity to promote sustainable long-term growth. Koon also emphasised that the venture will enhance self-sufficiency and ensure a stable supply of alumina, which is vital for the company's core smelting operations. On Wednesday, Press Metal's share price dropped by four sen, or 0.8 per cent, to RM4.85, giving the group a market capitalisation of RM39.96 billion.