Borneo Oil invests extra in Sabah cement plant

KUCHING: Borneo Oil Bhd plans to extend its funding to RM50.7mil in Sabah’s first built-in clinker and cement plant (ILPP), which is predicted to start operations by third quarter (3Q) of 2022.

The ILPP in Lahad Datu, which is owned by Makin Teguh Sdn Bhd (MTSB), has the capability to supply 720 million tonnes of portland grade cement per day.

The ILPP is the primary micro cement plant in Malaysia using inexperienced know-how, comprising warmth restoration and multi-fuel system capable of make the most of a combination of heavy gasoline oil, and biomass blended gasoline.

This method is ready to use palm kernel shells and different biomass and waste to generate warmth.

The general system makes use of rainwater and recycled water to scale back the general plant carbon footprint, in accordance with Borneo Oil.

Borneo Oil is Sabah’s largest personal proprietor of limestone reserves of cement grade high quality, and has closely invested on this useful resource.

Its deliberate elevated funding within the ILPP will likely be through the whole acquisition of some 19.6 million shares in MT 23 Assets Ltd, representing 19.5% of the present fairness curiosity in MTSB for RM50.7mil, Borneo Oil mentioned in a submitting with Bursa Malaysia final Thursday .

MT 23 Assets owns a 29.93% stake in MTSB.

MT 23 Assets has beforehand bought and transferred to Borneo Oil about 15 million shares of the issued and paid-up capital of MTSB for RM19.3mil by a conditional settlement dated Sept 8, 2021 and agreed to promote an extra 4.51 million shares (extra shares) ) upon acquiring an impartial evaluation of the corporate to determine the valuation of MTSB.

Borneo Oil has agreed to buy the extra shares in MTSB from MT 23 Assets for RM31.4mil to lift its fairness curiosity in MTSB to 19.5%.

MTSB is valued at RM263mil by an impartial skilled valuer final month, and its web tangible belongings as at monetary yr ended June 30, 2021 is RM195.3mil.

Borneo Oil, which owns home-grown quick meals restaurant chain SugarBun, and can be concerned in gold mining actions in Pahang, mentioned the RM31.4mil buy consideration can be paid from internally generated funds. The deal is predicted to be accomplished by 3Q22.

The ILPP is located adjoining to Borneo Oil group’s limestone quarry land. MTSB has entered right into a long-term provide contract for limestone with Borneo Oil group on the present stockpile and overburden waste from present quarrying operations to complement the ILPP’s preliminary limestone feedstock necessities.

“This provide of present stockpile and restoration waste from down streaming exercise can be in step with Borneo Oil group’s initiative in direction of zero waste and reusing/upcycling all supplies.

“This syngeristic alliance will allow MTSB and Borneo Oil to pool their mixed limestone assets and place Borneo Oil group for future growth.

“The acquisition presents a chance for Borneo Oil group to maneuver downstream its quarrying assets to spice up the income additional. There’s synergy between the Borneo Oil group’s present limestone quarrying enterprise operations and MTSB’s clinker and cement plant,” it added.

Based on Borneo Oil, the outlook for Sabah’s clinker and cement business is favorable given the excessive cement value within the state in contrast with the remainder of Malaysia, and given ILPP’s proximity to the Brunei-Indonesia-Malaysia-Philippines East Asean Progress Space (BIMP- EAGA).

“The already excessive value of cement in Sabah has been made worse in latest months as a result of drastic improve in logistics prices and fluctuation in overseas alternate charges.

“The Covid-19 closures of 2020 and 2021 have created an unprecedented urgency for Sabah to grow to be extra self-reliant in varied sectors of financial significance,together with meals and development supplies.

“Cement is one such commodity that’s important to improvement. Sabah can now not afford to depend on 100% imported clinker and cement. Due to this fact, the emergence of ILPP in Sabah is well timed.

“Sabah has an annual demand of between 1.2 million and 1.4 million tonnes of cement per yr. This doesn’t embody the long run improvement tasks deliberate on the east coast of Sabah, and the demand within the BIMP-EAGA area with shut proximity to the east coast of Sabah,” it added.


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