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Old 21-01-2010, 02:52 PM
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Default Vale to invest RM3bil in Perak

Vale to invest RM3bil in Perak

By ERROL OH
errol@thestar.com.my



PETALING JAYA: With land and port deals virtually sealed, a Brazilian mining giant’s plan to build a distribution centre in Perak is set to kick off this year.
According to Vale SA, the first phase will involve US$900mil (RM3bil) in capital expenditure, including US$98mil (RM333mil) in 2010.
Vale, which describes itself as the second largest diversified metals and mining company in the world, expects to enlarge its market presence in Asia once the distribution centre is up and running some three years from now.
The centrepiece will be a pelletising plant, which converts raw iron ore into pellets that are used in steel production.
“In 2010, we will be able to commence construction of a distribution centre in Teluk Rubiah, Perak, near the Straits of Malacca,” Vale said on its website, adding, however, that its board of administration had yet to approve the project.
The Vale project took a significant step forward on Tuesday when KYM Holdings Bhd said its agreement to sell 16 parcels of land in Teluk Rubiah, Manjung, to Vale International SA, had become unconditional. KYM and Harta Makmur Sdn Bhd, a 54% subsidiary, are disposing of the 166ha for almost RM102mil cash.
The agreement also included an option for Vale International to purchase 13 more parcels of land (about 306ha) for RM93.8mil cash.
This came less than a month after Integrax Bhd announced that 80%- owned Lekir Bulk Terminal Sdn Bhd had entered into an agreement with Vale International to provide the latter with transhipment services for iron ore cargo at a bulk terminal at Pulau Lekir Satu, also in Teluk Rubiah, over 10 years.
Integrax said the Dec 29 deal would result in additions of handling equipment and systems, and expansion of the marine infrastructure at the Lekir Bulk Terminal.
There has been much anticipation over the project since it was reported in June 2008 that Vale favoured locating a US$1bil pelletising plant in Malaysia to cater for the Southeast Asian market.
A year after that, Perak Mentri Besar Datuk Seri Dr Zambry Abd Kadir said a South American multinational was investing RM9bil in an iron ore distribution centre for Asia in Perak.
This was soon followd by KYM’s announcement of the proposed land disposal to Vale International.
At that point, in response to an email from StarBiz, Vale would only say that it was still studying plans to invest in pelletising plants and distribution centres in China, Middle East and South-East Asia.
However, it seems apparent from the statements on its website that Vale is now ready to proceed with what it calls its “Malaysia project”.
It said this would include a seaport terminal with sufficient depth to accommodate ships of 400,000 dead weight tonnes (dwt) and handling capacity for moving up to 30 million tonnes of iron ore in the initial phase, with an option to expand facilities to handle 90 million tonnes in the future.
The distribution centre is scheduled to begin operating in the first half of 2013.
On the website, Vale said building distribution centres in Asia was an important part of its marketing strategy.
“These centres will be run as ‘virtual mines’, giving more flexibility to our customer service capabilities and increasing our competitiveness, a key factor given the enormous distance that separates our Brazilian iron ore mines from Asia,” it added.
“At the same time, we will use these centres to customise our iron ore with the aim of increasing Asian market penetration, which is going from strength to strength.”
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