Sumitomo Corp., Japan’s third- largest trading company, will invest in an aluminum smelting project costing as much as $900 million in Malaysia’s eastern Sarawak state.
Sumitomo will acquire a 20 percent stake in a subsidiary of Kuala Lumpur-listed Press Metal Bhd., which is constructing a $300 million smelter slated for completion by the end of this year, according to a statement from Sumitomo. It has an option to increase its stake to 25 percent and participate in a proposed $600 million second-phase expansion.
Press Metal joins Aluminum Corp. of China Ltd. in planning to develop smelters in Sarawak where a 2,400-megawatt hydroelectric dam is nearing completion. Chalco, as Aluminum Corp. is known, is developing a $1 billion smelter with Malaysia’s GIIG Holdings Sdn., while Rio Tinto Group is partnering Cahya Mata Sarawak Bhd. on another project.
“Sumitomo expects that the new partnership with Press Metal will enhance its long-term growth strategy in the aluminum business,” the Tokyo-based company said in a statement on its website.
Press Metal rose 0.7 percent to 1.47 ringgit in Kuala Lumpur trading at 10:56 a.m. local time, after earlier rising 4.1 percent.
Their smelter will have initial annual capacity of 120,000 metric tons when the first phase is completed at the end of this year. Capacity may double by the end of 2012 through a second phase expansion, the statement said.
Sumitomo wouldn’t disclosure its investment amount due to a confidentiality agreement, spokesman Taro Ueno said in a e-mail to Bloomberg.
The group already has investments in aluminum smelters in Australia, Brazil and Indonesia.
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