Rio Tinto not investing in SCORE…can you see the silver lining?

Posted on March 29, 2012

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Rio Tinto Aluminium was supposed to invest up to RM7 billion to establish an aluminium smelting plant project in Samalaju.

Then early this week, it was announced that this won’t be happening in the foreseeable future.

Members of the opposition were quick to point out that this was proof that the Government has surely stumbled big time in developing the Sarawak Corridor of Renewable Energy, or as we like to call it, SCORE.

One opposition politician even mentioned that not only was this a big boo boo for the Government, it was also a political ploy for the 13th General Election.

Oh, please!

There’s RM7 billion on the line! The reason is economics…pure and simple.

Rio Tinto couldn’t get the electricity tariff they wanted, so they dropped their plans. That’s all there is to it.

And judging by some of its more recent moves regarding its operations throughout the world, we should not have been too surprised by its decision on Sarawak.

Welcome to globalisation, Sarawak!

Some people would probably be close to breaking down right about now, especially when learning that RM7 billion has decided not to land in Sarawak.

The Chief Minister though decided to look on the bright side…and admitted that the situation has now opened up the opportunity for at least two more major investors to set up shop in Samalaju.

I wonder why all these international investors are scrambling to do business in Sarawak?

I’m sure they’ve heard or read all the negative news about Sarawak that is being smeared by some highly motivated people…particularly those motivated people who can smell another election coming soon.

Even after hearing all the negative news by these highly-motivated spin masters, still these international investors come-a-knockin’ on our doors and flying to our shores.

Either they’re nuts or they know a good thing when they see one. Who can say for sure?

 

How The Borneo Post posted it:

No shortage of takers
Posted on March 29, 2012, Thursday

KUCHING: The termination of a pact between Cahya Mata Sarawak (CMS) and Rio Tinto Aluminium (M) Sdn Bhd (RTA) to set up a smelter plant in Samalaju would not affect the implementation of the Sarawak Corridor of Renewable Energy (SCORE).

Chief Minister Pehin Sri Abdul Taib Mahmud said the cancellation of the pact was not an issue as there were two other companies on the waiting list.

“In fact I am short of power at the moment for aluminium. I can only accommodate one at a time so if this one is not on it doesn’t matter because there is another one that will be coming,” he said without elaborating.

Taib told reporters this after launching the Malaysian Red Crescent (MRC) Kuching Chapter’s Flag Day yesterday.

“They in fact came to see me and said that they may not participate at this early stage of the project because the company has experienced some slight restructuring lately, but they may come back later,” he said.

According to a report from Reuters yesterday, Rio Tinto signalled a major retreat from its global aluminium business last October when it unveiled plans to sell 13 assets, including smelters and alumina refineries.

This came just four years after the company purchased aluminium giant Alcan for US$38.1 billion in one of the sector’s biggest ever deals. Last month, Rio Tinto slashed the book value of Alcan by US$9 billion.

The company is also exiting its diamond business, which includes operations in Zimbabwe, Canada and Australia, with assets worth up to US$2 billion.

On Tuesday, CMS said in a press statement that the termination involved heads of agreement between RTA and Samalaju Aluminium Industries Sdn Bhd, its wholly-owned unit, and the memorandum of understanding between both parties and Sarawak Energy Bhd (SEB).

CMS group managing director Datuk Richard Curtis said RTA and CMS had agreed they would cease to pursue plans to jointly develop an aluminium smelter at Samalaju but remained open to other future possible collaborations.

Curtis also said CMS remained committed to being a leading local private sector participant in the realisation of SCORE.

http://www.theborneopost.com/2012/03/29/no-shortage-of-takers/

 

How BERNAMA (via Business Times) saw it:

SCORE unaffected by smelter cancellation
Published: 2012/03/28

KUCHING: The scrapping of the proposed RM7 billion aluminium smelting plant project in Similajau, near Bintulu, will not affect the implementation of the Sarawak Corridor of Renewable Energy (Score), Chief Minister Tan Sri Abdul Taib Mahmud said today.

He said there were probably two other investors on the waiting list following the termination of the pact between Cahya Mata Sarawak (CMS), Rio Tinto Aluminium (Malaysia) Sdn Bhd (RTA) and Sarawak Energy Bhd (SEB) to construct the plant, located within the Score region.

“In fact, Sarawak is short of power for aluminium at the moment and can only accomodate one (project) at a time… So if this one (joint venture) is not on, it does not matter,” he told reporters after launching the Malaysian Red Cresecent Society Kuching Chapter Flag Day to raise RM50,000 for its various activities this year, at his office in Petra Jaya here.

Commenting on the termination of plans to jointly develop the aluminium smelter, he said the Rio Tinto side had come to see him on the matter besides informing that the Australian mining giant had underwent some slight restructure lately.

“So, as far as Rio Tinto is concerned, they said the company is not going to go for the first phase only and is not going to participate at this stage because they do not want to be tied down,” he said.

Yesterday, CMS Group Managing Director Datuk Richard Curtis said CMS and RTA had been working for several years to establish the project but were unable to finalise commercial power supply terms with SEB which would meet the parties’ current respective financial considerations and economic imperatives.

As a result, RTA and CMS had agreed that they would cease to pursue plans to jointly develop the aluminium smelter but remained open to other future possible collaborations.

The termination involved Heads of Agreement between RTA and Samalaju Aluminium Industries Sdn Bhd, a wholly owned subsidiary of CMS, and the memorandum of understanding between both parties and SEB.

Currently, CMS has taken a 20 per cent participation in the planned 600,000 metric tonnes manganese and ferro alloy smelter which is scheduled to commence production in 2013.

This smelter is being established in Samalaju Industrial Park by a subsidiary of OM Holdings Limited, an Australian listed miner, manufacturer and trader of manganese, iron and chrome ores and alloys. – Bernama

http://www.btimes.com.my/Current_News/BTIMES/articles/20120328131435/Article/index_html