Perwaja ... Aug11

Perwaja Holdings Bhd will yield lucrative income if it obtains an iron ore mining concession in Bukit Besi, Dungun, considering the significant material cost savings it could accrue compared with importing the raw material from overseas.

Its immediate savings would be US$100 (RM296) a tonne because the cost of mining was less than US$50 (RM148) per tonne. The potential margin from pelletising should benefit Perwaja as transportation costs would be below US$10 (RM29.60) per tonne compared with the current capesize bulker freight of more than US$10 and US$20 (RM59.20) per tonne from Australia and Brazil, respectively, to bring iron ore here.

Based on the assumption that Perwaja secures a 400ha iron ore mine in Bukit Besi with an initial capital outlay of US$10 million (RM29.6 million), producing 500,000 tonnes of iron ore in 2012, one million tonnes in 2013 and up to two million from 2014 onwards to 2031.

Iron ore was currently imported at a cost of over US$160 per tonne, free-on-board, against local cost of mining which would amount to less than US$50 per tonne.

Terengganu Menteri Besar Datuk Seri Ahmad Said disclosed the findings of a study which revealed that there were approximately 50 million tonnes of high-grade iron ore deposits in the area.

Meanwhile Perwaja Holdings Bhd has received approval in principle from the Terengganu state government to mine iron ore in Bukit Besi near Dungun.

The approval, announced by Terengganu Menteri Besar Datuk Seri Ahmad Said will help Perwaja bring down its costs, especially importing and shipping costs significantly.