CMSB ... Apr10

It is looking at raising funding on a non-recourse basis for its 40% share of the aluminium smelter at Samalaju.

Managing director Datuk Richard Curtis said negotiations for a power purchase agreement for the Salco (Sarawak Aluminium Company Sdn Bhd) aluminium smelter were ongoing and once concluded, final feasibility studies on the design, construction, commissioning and operation of the smelter would commence.

Negotiations between CMS, Rio Tinto Alcan and Sarawak Energy Bhd to finalise a power purchase agreement for the Salco smelter are ongoing.

Salco is a 40:60 joint venture between CMS and Rio Tinto Alcan (a subsidiary of Rio Tinto Aluminium, a leading global mining company based in Australia) to undertake the construction and operation of a huge smelter in Samalaju, Sarawak with a projected initial production capacity of 720,000 tonnes per year.

CMS will gain RM353.9mil from the sale of its stake in UBG Bhd and up to RM352.5mil has been earmarked for potential investment capital to take advantage of business opportunities that Sarawak and SCORE have to offer.

Until those investments have been identified, that money would be placed in liquid low-risk investments and with banks.

A major investment in the horizon for CMS will be the aluminium smelter at Samalaju.

The Sarawak government has also announced that power from the Bakun Dam will be used in SCORE projects. The Salco smelter is a key component of the next wave of development of Sarawak under the SCORE initiative.

SCORE is one of the five regional development corridors being developed throughout the country and is a government initiative to transform Sarawak into a developed state by the year 2020.

It is seen as a major driver of business for the CMS group as the government’s plans for 3 growth nodes in Tanjung Manis, Mukah and Samalaju would translate into higher demand for construction materials.As the leading construction materials producer in Sarawak, CMS is well-positioned to play a major role to support the implementation of SCORE.

CMSB is gearing its operations to meet the growing demand for construction materials such as cement, concrete products, stone aggregates, premix for road surfaces, wires, water pipes, steel pipes, etc.

CMS was also on the lookout for opportunities in which the group could participate in upcoming construction contracts or other investment opportunities as a result of SCORE and the 10th Malaysia Plan.

Apart from directly benefiting from SCORE, CMS feels that associate companies such as KKB Engineering Bhd would add to its position as a one-stop supplier of construction materials in Sarawak.

Another associate of the group, K&N Kenanga Bhd, was aggressively looking to expand its business by helping companies already in the state or hoping to enter Sarawak with advisory services or funding in order to participate in the growth of SCORE.

CMS Group is focused on strengthening its core businesses in construction materials and property development of its large land bank around Kuching.