Sarawak Energy Delays Smelter Expansion Projects in Malaysia

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Researched by Industrial Info Resources (Sugar Land, Texas)--A capacity shortage at state-owned power producer Sarawak Energy Berhad (Kuching, Malaysia) could delay 10 smelter expansion projects in the Samalaju Industrial Park, in Malaysia's Sarawak Corridor of Renewable Energy (SCORE).

Sarawak Energy said it will not be able to accommodate the projects until its $2.3 billion Murum Hydroelectric Project goes online in 2015 or 2016.

With an initial capacity of 944 MW, the Murum project is expected to have an average annual output of 5,242 gigawatt-hours. The Murum dam is one of four hydroelectric power projects expected to supply electricity for the state's aggressive industrialization.

Among the companies affected are Asia Minerals Limited (Hong Kong, China), which has invested $300 million in its ferroalloy smelter expansion, and OM Holdings Limited (ASX:OMH) (Perth, Australia), which needs a stable supply of electricity before starting Phase II of its $600 million Manganese & Ferrosilicon Smelter.

Asia Advanced Materials Sendirian Berhad (Bintulu, Malaysia), under Asia Cement Company Limited (Seoul, South Korea), also plans to expand its Silicon Smelter with three expansion phases, but it is hindered by the capacity shortage.

Evidence of the ongoing power shortage includes a frequency drop in the Bakun Mega dam, causing the Sarawak Energy's system to trip and cause a six-hour blackout in June 27, 2013.

The power outage led to the shutdown of the Mukah aluminum plant owned by Press Metal Berhad (Klang, Malaysia) (Kuala Lumpur: PRESS). The smelter, which produces 40,000 tons of aluminum ingots per year, was closed to accommodate reconstruction works to fix damage from the cooling of reduction pots.

This year, the largest aluminum producer in Malaysia also has started commissioning a second 120,000-ton-per-year aluminum smelter plant in SCORE, with plans to expand its capacity to 240,000 tons per year of aluminum ingots.

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