Malaysia builds biggest SE Asia aluminum complex

Malaysia builds biggest SE Asia aluminum complex

SINGAPORE (Dow Jones): A group of foreign investors in Malaysia is set to build Southeast Asia's biggest aluminum smelter complex, with a total production capacity of 500,000 metric tons a year, a senior government official told Dow Jones Newswires on Wednesday..

"The central government already approved the project, and the environmental impact assessment is ongoing," said Hafni Ibrahim, a development director at Perak State, where the complex will be build.

When completed, the complex will dramatically boost Asia's aluminum output which stood at 2.22 million metric tons in 2000. Total world production in 2000 was 21.20 million tons, according to the International Aluminum Institute.

Ibrahim declined to say when construction of the $US1.96 billion complex will begin, saying Perak State hopes to see it start "as soon as possible."

The complex will consist of two smelters, with a capacity of 250,00 tons per year each. Construction of the first smelter is expected to take 36 months, he said.

He said a consortium consisting of U.S. and Chinese investors will own the complex and that New York-based Charus Development Corp is the consortium's lead manager.

The consortium already incorporated a unit in Malaysia under the name of Masco Aluminum Sdn. Bhd, and project financing has been granted by foreign banks, he said.

Ibrahim didn't answer whether Masco Aluminum is related to U.S.-based building material company Masco Corp (MAS).

"Chinese investors' stake in the project is quite substantial, but I'm not sure whether they will have a majority stake," he said.

The planned complex is expected supply 120,000 metric tons domestically, and the rest will be for exports, according to Ibrahim.

Perak is well-equipped for such a large-scale investment in terms of land, manpower and energy supply, Ibrahim said.

The Perak State is going to grant to the consortium about 1,000 acres of land in the district of Manjung, 120 miles north of Kuala Lumpur.

Currently the state has two power plants, with a combined capacity of nearly 3,000 megawatts.

A third 3,000-megawatt plant is also being constructed but Ibrahim did not say when it would become operational.

Usually energy costs account for 25% of the cost of aluminum production.

Regarding raw materials, Ibrahim said Malaysia has bauxite reserves in Sarawak and Johore, but didn't say how big they were. Two to three tons of bauxite are required to produce one ton of alumina, and two tons of alumina are required to produce one ton of aluminum metal.

"It is most likely that we will import alumina," from Australia and India, he said.

Currently, PT Indonesia Asahan Aluminum is the only smelter in Southeast Asia, with a production capacity of 225,000 tons per year.

However the Indonesian smelter is not running at full capacity due to inadequate energy supply.

China and India are major suppliers of aluminum metal in Asia.