Tuesday 3 April 2012

Infrastructure - More SCORE transmission lines in the pipeline OVERWEIGHT


 - Press Metal’s new aluminium smelting plant would be the first user to use electricity from the Bakun Dam, said  The Star. The facility at the Samalaju Industrial Park would start taking in power from Sarawak Energy Bhd (SEB) from this month onwards. SEB CEO Torstein Dale Sjotveit was quoted in the report as saying that the 275kV transmission line linking SEB’s Samalaju power station and Press Metal’s new plant has been energised last Thursday. Under the deal, Sjotveit added that Press Metal is  to purchase some 480MW of power to kick-off commercial operations at its new smelter by June this year (our assumptions: end-3Q12)

- The 480MW of power is to run Press Metal’s new Samalaju smelter, which has a capacity of 240,000MW. Its existing 120,000-tonne Mukah smelter – which is taking in some 200MW of power – is already running at full capacity.

- Apart from Press Metal, progress for the other three pioneer investors at Samalaju is also fast taking shape and would commence operations in stages within the next two years. Tokuyama’s polycrystalline silicon plant (Phase II) is scheduled to be operational by 2Q2014 following the commencement of Phase 1 in September next year.

- Asia Mineral Ltd, which has signed a long-term power supply of 270MW with SEB, is scheduled to commence its manganese and ferro alloy smelting plant sometime in June/July 2013. OM Material’s Sarawak RM1.5bil plant (80:20 JV between OM Holdings and the CMS group), which would produce similar products as AML, would start power consumption and production testing from 2H2013.

- As such, we gather that SEB is set to construct three new transmission lines to connect power to these three new facilities at Samalaju, in addition to Press Metal’s. One line would be for 132kV, while the other two remaining lines are for 275kV. To be sure, we gather that tenders for the 275kV Samalaju-Tokuyama transmission line (Phase 2) has closed on April 18. By our reckoning, a 132kV transmission line for last-mile hook-ups costs around RM3mil and RM5mil, while a 275kV ranges from RM13mil and RM20mil.

- We believe Sarawak Cable would be favourably positioned to bid for these new transmission line projects, as it is currently constructing both the 132kV SamalajuTokuyama (RM6mil) and 265kV Samalaju-Press Metal (RM8mil) lines – and also supplied the power cables for the 275kV Bakun-Samalaju transmission lines. 

- Taken together, these latest developments should solidify Sarawak Cable’s chances to secure works for Sarawak’s RM3bil 500kV backbone transmission line system (transmission portion: RM2bil), whereby it is one of five parties (and the only local outfit) which has been pre-qualified for this massive job.

- From an end-user standpoint, Press Metal’s long-term power supply agreement with SEB (25 years) should help strengthen its grip as the leading integrated aluminium player within ASEAN – where capacity should triple to 360,000 tonnes when the Samalaju facility is fully commissioned by end-1H13.  

Source: AmeSecurities 

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