Isnin, 23 Julai 2012

13 di bukit besi - Google Blog Search

13 di bukit besi - Google Blog Search

Journey to Wealth: Steel Sector (2) - Perwaja still odds on in <b>Bukit</b> <b>...</b>

Posted: 22 Jul 2012 06:52 PM PDT


- According to a report byThe Edge Weekly, Perwaja Holdings is set to receive a lion's share of the Bukit Besi mining area in Terengganu. Bukit Besi covers ~2,400ha of land. With some 50 million tonnes of iron ore deposits carrying a FE (ferrous) content of up to 70%, the area is widely regarded as one of the largest iron ore mines in Malaysia.
- According to the report, Terengganu state government officials are still evaluating the iron ore mining concession in Bukit Besi, although they remain committed to carving out a large tract to Perwaja as was agreed last year. Apparently, the delays in the awards are attributable to the tedious process in evaluating a mine – i.e. from exploration right to exploitation. Perwaja is believed to have applied for more than 1,000ha.
- It was reported last December that the Terengganu government would allocate four plots of land of ~600 acres each. Two of these were supposed to have been allocated to Eastern Steel – a JV between Hiap Teck Ventures and China's Shougang group and Chinaco Investment Pte Ltd – and Perwaja. Further, the Lion group is another major player that is eyeing a concession in Bukit Besi.
- The Star subsequently reported last May that iron ore players were in the dark over the status of the iron ore concessions. The local daily had claimed back then that only Eastern Steel was given the actual size of its mining area (600 acres). The local daily also quoted industry officials as saying that for economies of scale, the mining concession size should be 500ha or more with a minimum lease period of 10 years.
- Our initial take is that both Perwaja and Eastern Steel would be in a strong position to secure mining rights in Terengganu. The former already has an existing mill in Kemaman, while the latter is in the process of setting up a RM1.8bil integrated facility.
- Perwaja would ideally also be able to tap local ore for its proposed iron ore concentration and pelletisation plant, which will likely be used as feedstock for its Direct Reduced Iron (DRI) products that is eventually processed into steel. We gather that Phase 1 is supposed to be ready by 1Q13 although initial reports had indicated that a trial run was possible by early-2H12.
- That said, we are unsure if and when the mining awards would actually crystallise after several delays – as the spectre of the 13th   General Election looms ahead.
- For now, we prefer to stick to long steel players that are leveraged to an expected uptick in domestic steel demand moving into 2H12. Our bets are on Ann Joo Resources and Lion Industries.
- In addition, we single out Ann Joo as an immediate beneficiary of an increasing proliferation of mining activities within Malaysia. Our channel checks indicate that the group already sources close to 90% of its iron ore supply from local mines at considerably cheaper prices compared to imported ore.    

Journey to Wealth: Perwaja - It is on track to get a giant share in one <b>...</b>

Posted: 22 Jul 2012 07:18 PM PDT


It is on track to get a giant share in one of the largest iron oremines in Malaysia, fending off competition from other local steel playerseyeing the mine located in resources rich Terengganu.

State government officials say they are evaluating the iron ore miningconcession in Bukit Besi but are committed to giving Perwaja a large tract asthey had agreed in 2011.

Perwaja is in the advanced stages of completing an iron ore concentrateand palletizing plant. The plant needs iron ore as raw material and Perwaja hadapplied for a long term concession in Bukit Besi. The state government agreedin 2011 but with no new developments, there were concerns about the delay inawarding the concession.

It is on track to complete the first phase of the iron ore concentrateand palletizing plant by 1QFY2013. The output will be used by Perwaja toproduce DRI, which is eventually processed into steel.

With the supply of iron ore from domestic sources the cost ofproduction DRI will be cheaper. Perwaja will not be exposed to the volatileprices of imported iron ore that caused it to suffer margin compression inmargins in the past.

Apart from Perwaja, Hiap Teck is poised to get an iron ore miningconcession in Terengganu. It has yet to get the documentation on the award ofthe concession.

The Lion group is also eyeing an iron ore concession in Bukit Besi.

Since FY2008 ended Dec 31, Perwaja has been recording losses. Howeverits cash flow from operations was in excess of rm50 million indicating theoperations are cash flow positive.

In the 1QFY2012 it posted a net profit of rm16.2 million.

The concentrate and palletizing plant when commissioned willsignificantly reduce the company's production cost and position itsproducts at more competitive pricing.
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