News: Abu Dhabi smelter joins crowded space for Sarawak’s energy

Abu Dhabi smelter joins crowded space for Sarawak’s energy

By Jahabar Sadiq
Editor

June 18, 2011

Najib walks beside Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed Al Nahyan (right) during an official welcoming ceremony in Putrajaya, June 17, 2011. — Reuters pic

KUALA LUMPUR, June 18 — Oil-rich Abu Dhabi’s RM18.1 billion joint-venture to develop aluminium-related industries in Sarawak is causing concern as it will crowd two other proposed smelters and an existing plant for the use of cheap power from the state’s Bakun Dam.

The Malaysian Insider understands from state officials that the 2,400MW hydroelectric dam can only support two large smelters and, possibly, a smaller one, leaving them to figure out if one of the big investors could pull out from the state.

“Smelting is not a small business. It needs up to 1,000MW for each smelter so Bakun’s 2,400MW is not enough for all,” a state official told The Malaysian Insider on condition of anonymity.

Prime Minister Datuk Seri Najib Razak announced yesterday that the National Economic Council had approved the joint venture by 1 Malaysia Development Berhad (1MDB) and Abu Dhabi’s Mubadala Development Company (Mubadala) to develop a RM12.7billion technologically advanced energy-efficient aluminium smelter.

“Mubadala will also help 1MDB team up with other strategic partners with expertise to develop downstream industries valued at RM5.4 billion,” he told a press conference yesterday.

The investment is expected to create more than 40,000 skilled jobs.

Bakun will not be able to cater to all four smelting plants. — Picture by Mohamad Shoox

Two other large smelters — one by a joint-venture between Cahya Mata Sarawak (CMS) and Rio Tinto Alcan, and another by GIIG Holdings Sdn Bhd and the Aluminium Corp of China Ltd (Chalco) — are still in the early stages of development. Both are looking at establishing smelters with capacities of 720,000 tonnes and 330,000 tonnes, respectively.

The only running smelter at the moment is Press Metal Bhd’s 60,000-tonne plant in Mukah, which has been operational since November 2009. It uses about 10 MW of power that is supplied by Sarawak Energy Bhd.

Sarawak has also announced it will develop other hydro power dams in the future but these dams will not be ready if all the smelting plants take off.

The Sarawak government has exclusive rights to Bakun’s power at a rate of 6.25 sen/kWh, under a deal signed between the state-owned Sarawak Electric Supply Corporation, a subsidiary of Sarawak’s sole electricity provider Sarawak Energy Bhd (SEB), and Sarawak Hidro Sdn Bhd, a unit of the Ministry of Finance Incorporated and owner of the Bakun Dam.

“It looks like one giant smelter might not take off. It could be Rio Tinto’s as they have yet to secure a power purchase agreement,” another source told The Malaysian Insider.

The source also noted environmentalists’ fear of pollution from the number of smelters in the state, known for its vast areas of million-years old rainforest and a fragile eco-system that is home to rare species of flora and fauna.

“Smelting is not a clean industry. There is that concern about pollution that the state must handle,” the source said, adding Sarawak is already facing pressure for its logging industry.

The Miri-based Borneo Research Institute Malaysia (Brimas), a NGO dedicated to protecting the environment and the rights of indigenous peoples, previously expressed health fears from the smelting industry when Rio Tinto first announced its plans for a smelter.

The principal sources of pollution caused by smelting are contaminant-laden air emissions and process waste such as wastewater and slag but newer technologies are available to reduce them.

Source: http://www.themalaysianinsider.com/malaysia/article/abu-dhabi-smelter-joins-crowded-space-for-sarawaks-energy/