OM Sarawak sees lower output

KUCHING: OM Materials (Sarawak) Sdn Bhd (OM Sarawak) expects production volumes of ferrosilicon (FeSi) at its smelting plant in Samalaju Industrial Park, Bintulu to drop further after recording a 16% decline in output in the April-June 2020 quarter (2Q20).

Production volume of FeSi was down to 44,200 tonnes in 2Q20 from 52,308 tonnes in 1Q20.

“The decrease in FeSi production volume was the result of placing an additional FeSi furnace on maintenance during the quarter due to limited manpower at the plant, ” said OM Holdings Ltd (OMH), which owns a 75% stake in OM Sarawak.

Its joint-venture partner Cahya Mata Sarawak Bhd (CMS) holds the remaining 25% equity interest in OM Sarawak, a pioneer energy-intensive industry in the Sarawak Corridor of Renewable Energy (Score).

OMH said the plant had been operating on limited manpower due to strict travel restrictions imposed by the Malaysian government as a result of Covid-19 pandemic.

“About 100 technical employees associated with the plant remain stranded in China since the onset of the Covid-19 pandemic.

“The lack of skilled manpower has adversely impacted the plant’s ability to operate near full capacity, and the further recruitment of foreign skilled and semi-skilled manpower is not feasible as the authorities have forbidden the hiring of new foreign workers in all sectors until the end of 2020, ” added OMH in the latest update on OM Sarawak’s operation to the Australian Securities Exchange (ASX).

Taking these factors into consideration, OMH said the company had decided to temporarily idle an additional ferrosilicon furnace, placing it on maintenance, and will also extend monthly maintenance periods for all other furnaces.

As a result, it said lower production volumes of ferroalloys are expected in the coming months.

The plant consists of eight main workshops with a total of 16 units of 25.5 MVA furnaces, of which 10 units are allocated for the production of FeSi and six units for the production of manganese alloy.

The plant’s manufacturing facilities have a design capacity to produce 200,000 to 210,000 tonnes of FeSi and 250,000 to 300,000 tonnes of manganese alloy per annum.

The plant has been operating at full capacity prior to the disruption to operation because of the pandemic. In 2Q20,13 out of the 16 furnaces were in operation, with seven furnaces producing FeSi and six furnaces producing manganese alloy.

In 2Q20, OM Sarawak increased the manganese alloy production volume by 12% to 57,692 tonnes from 51,723 tonnes in 1Q20.

OMH said in 2Q20, OM Sarawak recorded a 37% and 19% drop in the sales volume of FeSi and manganese alloy respectively due to weaker global market demand as a result of slower than expected recovery of steel demand as well as the downturn in global economic activities from the pandemic.

According to OMH, world crude steel production during April and May 2020 was 285.2 million tonnes, representing a 10.8% decrease compared to the same corresponding period in 2019.

“The company continues to adhere to local and global safety guidelines to minimise the risk of infection and transmission of Covid-19. This includes the implementation of social distancing arrangements and voluntary temperature monitoring across all operations, keeping the health safety and well-being of all employees and third parties a key priority.

Source : The Star