Press Metal to open plant in China

Press Metal Bhd (PMB) is poised to compete on even keel with low-cost Chinese rivals by setting up a US$50 million aluminium (RM190 million) extrusion plant in Guangzhou's Fushan City, the hub of the country's aluminium industry.

The new plant, PMB’s first outside Malaysia, is expected to come on-stream in early 2006 and drive the group's export sales, targeting Australia, Europe, the Middle East and the US markets.

Fushan City produces about 70 percent of aluminium extrusions in the China market.

Funding for the new plant would come from bond and rights issues, said PMB group chief executive Datuk Paul Koon after signing an agreement with Fushan City's Technology Industrial Park Development Pty Ltd (TIFD) in Kuala Lumpur on Jan 10.

"When we export, we always face competition from China. But as the saying goes, if you can’t beat them, join them," said Koon.

"The new plant in Fushan will be our platform to the international market," he said.

He said the plant would have an annual capacity of 150,000 tonnes of aluminium extrusions when fully completed and was expected to contribute a 20 percent growth to the group’s earnings.

PMB’s current plant in Malaysia has an annual output of 50,000 tonnes, of which more than 40 percent is exported.

Koon said demand from China had caused prices of raw materials to rise over the past two years. Competition from the country's low-cost producers had squeezed the manufacturers' margins further, he said.

He said aluminium extrusions are now traded at about U.S. $1,820 per tonne, compared with U.S. $1,500 to U.S. $1,600 last year.

Under its agreement with TIPD, PMB is acquiring the 275ha site in Fushan City's Sanshui Centre Technology Park for RM14.69 million and it would be for a 50-year period.

The technology park, sited at the Pearl River Delta, is within easy reach of several major economic zones and is only a 20-minute drive to China’s largest airport, the New Baiyun Airport. - theedgedaily.com