AluNews - June 2014

Rio Tinto to approve Qld bauxite mine

Financial Review - June 30th 2014,

Rio Tinto expects its $US4.8 billion ($5.1 billion) South of Embley bauxite project near Weipa in Queensland to deliver returns comparable to its lucrative Pilbara iron ore operations, and is likely to approve its development this year, UBS analyst Glyn Lawcock said.

Mr Lawcock tips South of Embley – which is critical to extending the life of bauxite mining at Weipa – will deliver an internal rate of return of about 29 per cent.

“Rio expects the return on this project to be ‘comparable to the Pilbara’ (i.e. greater than 20 per cent),” Mr Lawcock wrote from a tour of Rio’s Alma smelter, in Canada.

“Rio Tinto Alcan is particularly bullish on the outlook for bauxite, with material demand growth and the Indonesian ban impacting the market. Rio is well positioned to benefit from this.”

Rio’s aluminium division, under new chief Alfredo Barrios, is likely to approve the South of Embley project this year.

JP Morgan analyst Jason Steed, who has also been on the Rio North American site tour, said the focus for growth at Alcan is “clearly weighted towards bauxite over aluminium and alumina, with the South of Embley project well advanced at the planning stage”.

Rio is the largest global producer of bauxite, with a current long position of 18 million tonnes, including Gove.

The South of Embley project would initially produce 22.5 million tonnes of bauxite each year, but 10 million tonnes per annum would be replacement tonnage for Weipa, with the possibility to expand to 50 million tonnes per annum.

Mr Lawcock’s return figure is based on the 22.5 million tonnes per annum run rate.

He values the project at $US4.8 billion, and tips it will cost $US2 billion to $US2.5 billion and take three years to develop.

Rio Tinto Alcan has improved earnings before interest, taxation, deprecation and amortisation by $1.5 billion since 2011 and is likely to build on this next financial year. Most of its assets are in Canada and Australia.

Cost-cutting is helping “create momentum” in the division and the miner is well positioned for a recovery in aluminium prices, Mr Lawcock said.

Mr Steed noted that “the cost reductions across Rio Tinto Alcan have been some of the most impressive achieved across the broader company”.

About $231 million was cut in 2013, and sustaining capital expenditure fell to $847 million, from $955 million in 2012.

“Importantly, management believes these reductions can be maintained,” Mr Steed said.

“When asked whether a 40 per cent margin is achievable from the division, management noted this relies on higher prices (primary metals division is already first cost quartile).”

Rio management has a positive market view on bauxite but are more cautious on alumina and aluminium, Mr Steed said.

“Rio remains bullish on the market over the long term and believes the current outlook is improving,” he says.

Management said it was too hard to predict whether Indonesia will ease the bauxite export ban in the medium term, Mr Steed wrote.

“But (they) did note there were powerful individuals in the country that owned deposits that were frustrated by the new rules. There is currently no activity on the ground. Management believes China still has excess inventory which will take nine to 12 months to reach normal levels.”

Rio predicts aluminium demand will grow at 5 per cent each year to 2020, taking the market to more than 70 million tonnes per annum.

Rio’s Kitimat aluminium smelter project in British Columbia remains on track for commissioning in the first half of 2015, but analysts were not updated on the $3.3 billion capital expenditure budget, which Mr Steed suspects will creep upwards.

Aluminum of China : CHALCO to form JV for alumina project

4-traders - June 30th 2014,

Aluminum Corporation of China (CHALCO) (02600) said

it entered into a joint venture agreement with Hangzhou Jinjiang Group Co., Ltd. to

jointly establish Guizhou Huajin Aluminum Co., Ltd. with a registered capital of

temporarily amounting to Rmb1 billion.

CHALCO and Jinjiang Group will contribute Rmb600 million and Rmb400 million. Upon the

establishment of Huajin Aluminum, CHALCO and Jinjiang Group will hold 60% and 40% equity

interest respectively in Huajin Aluminum.

The construction of Qingzhen Alumina Project involves an investment of about Rmb3.8

billion, among which Rmb1 billion will be financed by Huajin Aluminum by internal funds

while the remaining investment will be made by Huajin Aluminum through the application of

bank loans. (HL)

Alba to start $2.5bn expansion work by year-end

Trade Arabia - June 30th 2014,

Alba's proposed $2.5 billion expansion to add a sixth production line is likely to start by the end of this year, the company's chief executive has said.

In an exclusive interview with the Gulf Daily News, our sister publication, Alba chief executive Tim Murray said the bankable feasibility study was almost complete and the project was now subject to approvals from the board and authorities.

The construction of a fifth power station will also be a part of the expansion, he said.

Next steps include finalising long-term contracts to secure gas supplies for powering the new line.

Murray said the project would take 36 months for completion from the commencement date.

Once the sixth potline goes on-stream, Alba expects to produce an additional 400,000 tonnes of aluminium a year, boosting current production capacity by 45 per cent to around 1.3 million tonnes.

"Line 6 will help us realise our ambition to remain one of the largest smelters in the world," he added.

The company is currently the fifth largest smelter in the world.

"The initiative will help Bahrain capture a significant portion of the aluminium value chain, creating many co-investment as well as employment opportunities downstream.

Alba's last major expansion took place in 2005 when it added a fifth potline at a cost of $1.7bn.

Bechtel, which is doing the feasibility study, was involved in that project too as the engineering, procurement and construction management contractor.

According to Murray, global demand for aluminium remains healthy and is expected to grow at an average of 5pc this year with emerging markets continuing to be the key growth driver.

"However, the market will be oversupplied and without further production discipline, prices are likely to struggle.

"The company is trying to lower costs to stay competitive internationally. This year, the focus is on leveraging strong physical premiums and accelerating our initiatives under 'Project Titan'," he said.

Started in February, Project Titan is a two-year efficiency programme aimed at reducing cash cost by $150 per tonne by end of January 2016.

Murray said the smelter will continue leveraging technology to streamline and modernise its operation in its quest to raise productivity.

Alba achieved a production record of 912,700 tonnes of aluminium last year and expects to better that to 920,000 tonnes this year.

The smelter is a key pillar of Bahrain's economy and contributes around 10pc of the national GDP, he said.

Nearly 88 per cent of Alba's 3,000 plus employees are Bahrainis.

About half the company's aluminium output in the form of billets, slabs, foundry alloys and molten metal, goes to the downstream industry in Bahrain.-TradeArabia News Service

Qatalum inaugurates state-of-the-art Pot Relining plant

Qatalum - June 29th 2014,

US$44m facility will produce almost 300 pots per year by 2016

Qatalum has inaugurated its state-of-the-art Pot Relining plant, following the project's successful and timely completion Wednesday 25th of June

The opening ceremony was attended by Hilde Merete Aasheim, Vice Chairperson to the Qatalum Board and Executive Vice President of Primary Metal at Hydro, together with Tom Petter Johansen, CEO of Qatalum and Hans Petter Lange, Reduction Manager.

Also present were Iain Dodds, Project Manager, representatives from Dutco McConnell Dowell (Qatar) LLC, the project contractor, Davy Fosen, Relining Plant Manager, and representatives from Staref, the relining service contractor.

At an overall cost of US$ 44 million, the Relining Plant Project has been considered a resounding success. The project was delivered on time, with no recordable injuries during the 1,205,961 man hours worked on site.

"I consider this a reflection of the overall quality of operations within Qatalum and an indicator of our ambitions to become a globally leading smelter," said Tom Petter Johansen, Qatalum's CEO.

Significant modifications to the Qatalum site had to be made in order to facilitate the relining facility. Commenting on these, Iain Dodds, Relining Project Manager, said: "Progress was at times challenging but ultimately the safe delivery of a high quality plant was always Qatalum's number one priority. I believe this plant is state-of-the-art, with the durability to last for several relining cycles at Qatalum".

Strong coordination between Qatalum and the contractor was required to complete the more critical and challenging stages in the construction of the largest project outside of the Smelter's construction.

Hans Petter Lange, Reduction Manager and owner of the relining process, said: "The oldest pots in the pot line are now approaching the end of their life. In order get through the extensive program of relining the 704 pots in our potlines during the next 3-4 years we are really happy to receive the state of the art facility on time, on cost and with excellent HSE results during the construction phase. We now look forward to take over the facility from project manager Iain Dodds and from the EPC contractor DMD and get started.

The new Relining facility will be owned by Qatalum and managed by Davy Fosen. Operations, however, it will be conducted by a service contractor. The Pot Relining Service Contract (2014-2019) has already been awarded to Staref, a joint venture between Aluref (South Africa) and STS Oman, and is valid for the relining of 704 pots. Staref management and a small team is already on site with the mobilization of personnel ongoing. During the contract period the service contractor will have up to 250 people on site, working 24 hours a day, 6 days a week. The contractor will in addition to the relining activities also be responsible for operation and maintenance of the Cathode Rodding Shop (CRS), and provide manpower supply to the Pot Start-up teams.

Union Minister to work for setting up bauxite factory

Zee Media Corporation Ltd - June 24th 2014,

Lohardaga: Union Minister of State for Social Justice and Empowerment Sudarshan Bhagat has said he would make efforts in setting up a bauxite factory in Lohardaga.

Lohardaga is rich with bauxite. I will try to bring bauxite factory in the district, Bhagat, who represents Lohardaga constituency, told reporters on a visit here yesterday.

Lohardaga is famous for bauxite but sends the mineral outside as it has no factory of its own.

Stating that he would work for the poor, the minister also said his endeavour would be to extend railway lines till Korba in Chhatisgarh via Gumla.

New Mining Law of Indonesia: Construction of many Smelters Delayed

Indonesia Investments - June 19th 2014,

The construction of smelting and refining facilities in Indonesia - as stipulated in the new and controversial 2009 Mining Law - remains troublesome because several mining companies have delayed construction pending the judicial review of the 2009 Mining Law by the Constitutional Court of Indonesia. Meanwhile, Indonesia's Association of Bauxite and Iron ore Entrepreneurs (APB3I) said that the construction of 5 bauxite smelters need to be postponed due to financial uncertainties.

Earlier in 2014, several Indonesian mining industry players, including the Mineral Entrepreneurs Association (Apemindo), Harapan Utama Andalan, Pelayaran Eka Ivanajasa and Koperasi TKBM Kendawangan Mandiri requested the Constitutional Court of Indonesia for a judicial review of the 2009 Mining Law. This law includes the prohibition of mineral ore exports from Indonesia, instead forcing miners to refine minerals domestically first in order to add value to the export product. This export ban was introduced on 12 January 2014, although in a slightly looser form. If the mining company can prove that it is serious about building smelting facilities then exports of unprocessed minerals are temporarily allowed (until 2017), but the company will also need to face progressive export taxes (increasing from 20 percent in 2014 to 60 percent in mid-2016).

However, Director for Minerals at the Ministry for Energy and Mineral Resources Dede Suhendra, said that the ruling from the Constitutional Court will not come anytime soon as the institution is now busy with cases related to the 2014 elections. The court’s latest hearing regarding the 2009 Mining Law was held on 7 May 2014 but the date of the next hearing is not known yet. From the miners’ perspective, as long as there is no clarity about the matter, they would like to wait before spending a large quantity of money on the construction of smelting facilities.

Erry Sofyan, Secretary-General of the Indonesian Bauxite and Iron Ore Entrepreneurs Association, hopes that the government will provide room for the continuation of bauxite exports up to 2017. If miners will be allowed to export bauxite (an aluminium ore), they can use profits to establish the smelting facilities (to process bauxite into alumina).

Sofyan said that there are currently five companies that are constructing bauxite smelters, two of which - Well Harvest Wining Alumina Refinery and Bintang Alumina - are in an advanced stage. The remaining three - the Nusapati Group, Fajar Mentaya Abadi and the Gesit Group - are still in the early stages and have (temporarily) delayed further progress. Sofyan added that 51 bauxite producing companies have been forced to cease operations since January 2014 resulting in a total of 40,000 layoffs.

Inalum begins $1.9 billion expansion with new power plant

The Jakarta Post - June 14th 2014,

State-owned aluminium maker PT Indonesia Asahan Aluminium (Inalum) will spend around US$750 million on a steam-fueled power plant, which would double its production capacity, starting from mid-next year in anticipation of higher energy demand.

Inalum president director Winardi Sunoto said Friday that the firm expected to cover 35 percent of the 600-megawatt power plant project from internal cash. It was now seeking to generate the rest from external sources.

“The construction of the power plant will take up to 40 months, which is very long compared to a smelter or seaport, so it is the priority,” he told reporters after a meeting with Industry Minister MS Hidayat.

The new power plant project is part of $1.9 billion that Inalum will spend on a wide array of development projects over the next few years, including a new aluminium smelter and seaport.

This expansion will enable Inalum, the operator of Southeast Asia’s sole aluminium smelter, to double its capacity to 500,000 tons of aluminium ingots in 2019 following the acquisition of the firm from Nippon Asahan Aluminium (NAA), a consortium of 12 Japanese firms, in early November last year when its 30-year partnership ended.

To finance the projects, Inalum will prioritize the use of internal cash while seeking alternatives such as syndicated loans, bonds issuance and an initial public offering (IPO), Winardi said.

It would likely be ready for an IPO in 2016, but it will be subject to approval from its shareholders, he added.

Inalum currently has internal cash of around $400 million, according to Winardi.

The company has gradually increased its production capacity since its takeover. It produced about 260,000 tons of ingots last year, up 4 percent from 2012.

The firm expects to totally stop exports and sell its output domestically next year to meet surging national consumption.

The biggest portion of Inalum’s output is sold in Jakarta, followed by Surabaya, East Java, and Medan, North Sumatra, which jointly take up more than 200,000 tons.

Winardi said that Inalum also aimed to conclude a joint venture agreement (JVA) with state-owned mining firm PT Aneka Tambang for a refinery project in Mempawah, West Kalimantan, at the end of this year.

The construction of the refinery, which will process bauxite into alumina, is estimated to cost $1.5 billion. It will be able to produce 1.2 million tons of smelter-grade alumina, the key raw material to produce aluminium ingots, once it starts operation in 2017.

Inalum will need at least 1 million tons of alumina to make 500,000 tons of aluminium ingots. At present, it imports the material from Australia as Indonesia does not have an alumina refinery despite its abundant bauxite ore supply.

Inalum also expected to finish a feasibility study on its new aluminium smelter by year-end and obtain partners to execute the plan by next year, Winardi further said. The project might kick off either next year or in 2016, he added.

Norsk Hydro to expand UBC smelter in Germany

Recycling Today - June 11th 2014,

Norway-based aluminum producer Norsk Hydro has announced plans to build a new, integrated smelting line for used aluminium beverage cans (UBC) at its Neuss, Germany plant (pictured at right in a photo courtesy of Norsk Hydro). The line will be completed by end 2015 and will increase the plant's existing annual capacity of 50,000 metric tons to more than 100,000 metric tons.

The facility is expected to cost around €45 million (US$61.2 million) and employ around 40 people. In addition to more than doubling the recycling capacity at the Neuss plant, the new line will be able to accept a wide range of used beverage cans, says Norsk Hydro. The liquid aluminium metal produced at the Neuss facility will serve as input material for making new beverage cans.

“With this investment, we are meeting a growing customer demand for recycled aluminum and a closed recycling loop while pursuing our growth strategy for the beverage cans market,” says Oliver Bell, executive vice president and head of Norsk Hydro’s Rolled Products business area.

The company says the recycling line will use newly designed sensor technology for sorting and separating different types of recycled metal that was developed at Hydro’s research and development center in Bonn, Germany.

The drive to cut energy costs in production of aluminium

The National - June 7th 2014,

Dr Mohammed Ibrahim Ali

With investment in aluminium in the Arabian Gulf expected to reach US$55 billion (Dh202bn) in 2020, competition between aluminium smelters is set to become fierce.

And the difference between industry leader and industry laggard may be down to who can run the most efficient plant.

To help ensure it ends up in the former category, Emirates Aluminium Company (Emal), the UAE’s state-owned aluminium smelter, has turned to the Masdar Institute’s researchers to help improve the efficiency and speed of aspects of the plant’s operation.

A typical aluminium plant comprises three areas: the aluminium smelter, the carbon anode, and the cast hour.

In very simple terms, aluminium production involves dissolving naturally occurring alumina – aluminium oxide – at very high temperature, placing it in a steel-shelled vat lined with graphite, known as a reduction pot, that serves as a cathode and adding a carbon anode. An electrical current is then passed through the molten metal, causing aluminium metal to be deposited on the lining of the vat.

Three areas of this process are ripe for improvement.

The first is related to the energy efficiency and environmental impact of the gas-fired furnaces within the cast house.

Our research has found room for improvement, resulting in 22 per cent savings in gas consumption, depending on furnace design and operation.

The second area is related to the voltage drop in the aluminium smelter from contact resistance in the anode’s assembly parts – essentially, making sure that as much of the electricity generated is used for the separation process itself as possible, rather than being wasted in other parts of the system.

By saving a few millivolts in the cell-voltage drop, a significant amount of power can be saved.

The third area is in the reduction pot rebuild area. Because the process requires aluminium to be deposited on the lining of the vat, every so often it needs to be stopped so the metal can be removed. This requires the pot to be cooled, and then taken apart – to get the aluminium out – and rebuilt.

The quicker this can be done, the better. We proposed an efficient cooling technique to save about 36 per cent of cooling time – which means we need about half the space for storing pots that are being cooled or rebuilt.

Collaborations like these are beneficial to both industry and academia. For those of us in academia, working with industry leaders like Emal can provide the opportunity for our students to become familiar with the aluminium-smelting process in practice and apply thermal science to relevant industrial applications.

By working together to solve industry problems, we are helping to put both Emal and the Masdar Institute on the sector map, adding to the body of knowledge about aluminium manufacturing through conference presentations and journal publications, and helping to train skilled and innovative engineers who can eventually play a key role in contributing to the economic growth of the UAE and the region.

For industry, this kind of collaboration, and others like it, can be seen as a long-term investment that increases the process efficiency, improves environment control and adds value to a business.

With this project, we hope to contribute to the ongoing development and advancement of the UAE’s ambitious and high-potential aluminium market.

And as aluminium smelting accounts for about a quarter of the power consumed in the UAE, research aimed at making it more efficient is essential for the UAE’s sustainable economic growth.

Dr Mohammed Ibrahim Ali is assistant professor of mechanical and materials engineering at the Masdar Institute of Science and Technology

ALCOA threatens production cut, layoffs in Suriname bauxite sector

Jamaica Observer - June 4th 2014,

Suriname President Desi Bouterse says the Aluminum Company of America, (ALCOA) plans to cut production at Suralco to a third and lay off 1, 000 workers including 800 contractors.

Bouterse told Parliament that the issue is of "a national matter of concern for which a joint solution must be found".

ALCOA’s Suralco has been active in Suriname since 1916, mining bauxite to feed the Paranam refinery. With an output of some 2.2 million metric tons per year, the bauxite mining operation stood as Suriname’s main earner.

A top executive of ALCOA’s Latin America office visited Suriname last week to lay out the company’s plans. The company said if it is to maintain a presence in Suriname, it would have to reduce its production to 360,000 tons of refined bauxite annually.

Bouterse told Parliament that Suralco also wants to pay less for the crude oil it acquires from state oil company Staatsolie.

He said the company also wants Government to pay more for electricity from the Afobaka hydro energy plant. The company built the dam in the 1960’s to generate electricity for the Paranam refinery; the surplus of the electricity generated is sold to Government.

Bouterse said “this problem” has the attention of his administration, but that it was also an issue that requires input from all members of Parliament.

He said that government is also acquiring the services from local and international consultants.

“The community of Suriname has for almost 100 years bent over backwards to maintain this historic bauxite sector. Suriname has never reneged on its contract with Suralco,” Bouterse said.

But one opposition legislator, Radjkoemar Randjietsingh of the Nieuw Front party has called for the resignation of the Natural Resources Minister.

“Minister Jim Hok should step down. The fact that Suralco is threatening to cut its output is the result of this government’s failures,” said Randjietsingh.

National Assembly speaker Jennifer Geerlings-Simons has announced the establishment of a Commission comprising legislators to look into the matter.

China Hongqiao to Buy Guinea Bauxite Company for $120 Million

Shanghai Metals Market - June 4th 2014,

China Hongqiao Group Ltd. agreed to buy a company developing bauxite deposits (resource base: 2.2 billion tonnes) in Guinea, Africa for $120 million, aastocks.com reported today.

China Hongqiao and Winning Logistics (Africa) Co. reached an accord to buy this unidentified company, and Hongqiao will have a 90% stake in the target company and Winning will hold the rest 10%, it added.

TRIMET acquires aluminum smelter in Voerde

Foundry-Planet Ltd. - June 2nd 2014,

Trimet Aluminium SE has acquired Voerde Aluminium GmbH and all 280 of its employees. The company, which is currently in bankruptcy proceedings, manufactures primary aluminum and carbon anodes used in electrolysis for metal extraction. Trimet will continue to run the aluminum smelter and anode factory at its location on the Lower Rhine and will take over the full staff.

“We are pleased that we can continue to run Voerde Aluminium GmbH as a viable long-term production site and secure existing jobs,” says Heinz-Peter Schlüter, owner and Supervisory Board Chairman of Trimet Aluminium SE. The acquisition was contingent upon an EU-compliant asset relief scheme for the energy-intensive industry under the Renewable Energy Sources Act. This has removed any existing legal uncertainty and created planning security. “We hope that this legal certainty remains over the long term,” says Schlüter. With the Voerde location, the materials specialist has expanded its production capacity for primary aluminum, continuing the positive growth demonstrated over the past few years. “Key European industries have great demand for aluminum.

With the Voerde location, we can meet the growing demand. The staff and the technical equipment are perfectly aligned with Trimet’s orientation as a provider of customized solutions,” says Dr. Martin Iffert, CEO of Trimet Aluminium SE.

The medium-sized family enterprise operates production facilities at eight locations which manufacture, cast and recycle aluminum. In December 2013, Trimet acquired two production plants in France.

Mukah smelter up and running again

Star Publications - June 1st 2014,

Press Metal Bhd’s aluminium smelting plant in Mukah, which was badly damaged by a statewide power outage last June, is now up and running again.

Group chief executive officer Datuk Koon Poh Keong said the rebuilt facility, which went fully operational last month, was expected to contribute positively to earnings in the current quarter.

The Mukah plant, which has an annual production capacity of 120,000 tonnes, was shut down after its smelting pots were damaged by the blackout.

Press Metal Sarawak Sdn Bhd, which owns the plant, had provided an estimated RM90mil for both assets written off and operating loss.

During the re-commissioning stage earlier this year, the smelter incurred an additional except- ional loss of RM2.2mil, according to Koon.

He said due to these losses and lower aluminium price, Press Metal’s pre-tax profit only increased marginally to RM36.4mil in the quarter ended March 31, 2014, from RM35.3mil in the same period last year — despite a 23.9% jump in revenue to RM897.1mil from RM724.2mil previously.

Earnings per share rose to 5.48 sen from 4.97 sen.

“Higher revenue was contributed by the Bintulu smelting plant, which had achieved full operations in fourth quarter of 2013,” said Koon.

The Bintulu facility is more than two times larger than the one in Mukah, in terms of installed production capacity.

On the current year’s prospects, Koon said the overall business environment remained challenging in view of higher operational cost and low commodity prices.

However, he said demand for aluminium remained strong and the products’ premium had increased.

“Our management will remain focused in improving its operatio-nal efficiency and enhancing its value-added products in order to stay competitive in the market.”

LB Aluminium plans expansion

Star Publications - May 31st 2014,

Semenyih-based LB Aluminium Bhd is looking to undertake another major expansion exercise this year, in line with the growing aluminium extrusion industry in Malaysia.

It is currently in the midst of preparing the budget for the expansion. However, details of its expansion will only be finalised by the end of July. “We are still planning what to do, what to expand and what to buy, but no firm decision has been made as yet,” says chief executive officer Mark Wing Kong.

Three years ago, the company underwent a major expansion of capacity, which cost about RM40mil.

“It took time to absorb that. So in the financial year ending April 30, 2015, we are looking at another expansion to expand capacity as we still feel there is still growth for Malaysia for the aluminium extrusion industry.

“We are quite confident of the direction of the country and hence confident enough to expand further,” says Mark.

The company’s expansion will either be by way of capacity, new products, and or, new markets, he adds. On another note, the company has no plans to go into the upstream side of the industry.

Mark says any expansion will be internally funded. “Our financials are very strong, so we don’t foresee going to the market to raise funds,” he says.

According to Bloomberg data, LB Aluminium’s 2013 net debt to earnings before interest, tax, depreciation, and amortisation ratio stands at 1.46.

LB Aluminium continually upgrades its processes and equipment as needed. Mark tells StarBizWeek that the company spent some RM20mil in capital expenditure (capex) in the 2014 financial year. “We keep finding ways to upgrade and automate to cut cost, and to save electricity, gas, and water,” says Mark.

The company’s production facilities are located on 30 acres in Beranang’s industrial park. It also has another factory in Sarawak, spanning five acres to cater for demand in this state and Sabah. “It’s basically to reduce our transport cost. We can also service our customers faster and are closer to market,” he says.

Both factories are currently operating at about 70% capacity, which Mark says is an ideal level for the company, as it needs to have spare capacity at any point in time.

“The industry can be a bit lumpy. For example in the last quarter, because of the Chinese New Year festivities, volumes were down. Then in April it caught up. It is these types of situations that we need to worry about. We need the extra capacity to cater to this,” he says.

Turnover of orders, which are primarily for the building and construction industry, are higher now that its clients are moving towards keeping less stock in hand.

“Lately most builders are moving towards green index buildings. Typically a green building would use more for aluminium, which works out as a bonus for us. We expect this trend to continue into the future,” he says.

The company also caters to other industries such as electrical and electronic, transportation, engineering, solar, household tools, and furniture among others.

LB Aluminium is also considering building an extension to its factory in Beranang. It has six acres within the same area. “That was to cater for future expansion,” says Mark.

The company’s current production facilities include 17 extrusion presses with an annual production capacity of 90,000 tonnes. This includes a fully integrated 4,300 tonnes extrusion press, the largest press in Malaysia to-date.

It also has a fully-automated vertical powder coating line, and together with its two existing horizontal powder coating lines, can cater for capacity of 24,000 tonnes.

Currently, the company has two anodising plants, one of which is Malaysia’s first and only eco-friendly vertical anodising plant, which is fully automated to obtain consistency and uniformity of quality anodised finishes.

It also serves as a one-stop solution centre for its clients, in providing value-added services such as cutting, degreasing, hole punching, stamping, and tapping among others.

LB Aluminium’s die-shop is equipped with the latest CAD-CAM software, which enables it to design and manufacture die-moulds, which comprise various complexities.

The company currently holds 25% of the market share in Malaysia. While it predominantly caters to the domestic market, it exports some 30% of its products to the UK, Australia, North America, South-East Asia and Japan.

“We will not focus on any individual market, but on all our export markets. We will diversify our customers rather than regions we supply to,” he says.

In the past year, the counter saw its share price gain 54% to 67 sen on Friday. It currently trades at around 7.6 times its historical earnings, compared with its peers like Press Metal Bhd and Tong Herr Resources Bhd, which trade at 100 times and 13.3 times respectively.

“It is still below our net asset value, which is more than RM1, which represents a 30% discount,” Mark says.

He foresees steady growth for the company in the next few years. “The aluminium business is something that grows together with the economy of Malaysia. Going by what the country is forecasting in the next few years, we will register gradual growth in the next few years,” he says.

In the third quarter of 2014, the company saw slight decline in net profit and revenue to RM4.88mil and RM96.62mil respectively on the back of lower business volume following the festivities during the quarter.

LB Aluminium is position where it can afford to pay more dividends, which could be something that shareholders could look forward to. It has been religiously paying 1.75 sen per share in dividends for the past few financial years.