Press Metal Aluminium Holding Berhad Vertical investment project – carbon anodes

Choa, Wei Keong (2024) Press Metal Aluminium Holding Berhad Vertical investment project – carbon anodes. [Dissertation (University of Nottingham only)]

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Press Metal Aluminium Holdings Limited is Southeast Asia's largest integrated aluminium producer with an annual capacity of 1.08 million tons for aluminium smelting and 210,000 tons for extrusion activities. Harnessing Sarawak's hydropower supply has made the company a low-cost, low-carbon emission metal and remains competitive in the market.

The experience of the past few years amid the COVID-19 pandemic and metal price volatility, relaying the only country to supply carbon anodes, especially from China, exposes companies to high risks in their operations.

Leveraging policies by hedging metals on the London Metal Exchange may expose the company to high financial risk, and if prices rise significantly, then company must ensure sufficient cash flow to cover the shortfall. Therefore, shifting the leverage approach from the futures market to physical hedging means that ownership of raw materials will be able to reduce the company's exposure while meeting investor expectations.

From PESTLE analysis of new business between the two potential countries of China or Malaysia, Samalaju Industrial Park, Sarawak is the best strategic location to locate a new carbon anode plant in. The savings in the forecast term sheet show that the project is paying off well for the company. The return on investment is less than four years.

There are challenges ahead, like recruiting experience workers, supply of green petroleum coke and getting financial to finance the project. However, the obstacles and risk can be overcome and manageable.

In summary, the proposed vertical investment, venturing into the carbon anode industry, producing your own carbon anode is attractive with a good return on investment and providing a stable supply of materials for the smelters in Samalaju and Mukah.

Item Type: Dissertation (University of Nottingham only)
Depositing User: Choa, Wei
Date Deposited: 11 Mar 2024 08:27
Last Modified: 11 Mar 2024 08:27

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