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27. December 2010

Foreign firms show interest in building steel plants in Malaysia

It is reported that companies from Europe, Japan and South Korea have shown interest in building integrated steel plants at the proposed heavy industrial park at Bagan Datoh in Perak, which could generate total foreign investments of MYR 27 billion.

Mr Raymond Chong Thin Choy MD of KYM Holdings Bhd said that companies from the three countries were still considering the possibility of setting up their plants and that each company would likely invest about MYR 9 billion per plant.

The intention of setting up their plants is driven by the Brazil mining giant Vale International SA's plan to set up an iron ore distribution centre and pellet plant and a 2.3 kilometers jetty. KYM will develop and promote the heavy industrial park.

Mr Chong pointed out that the Bagan Datoh park was strategically located near Vale's proposed iron ore distribution centre and pellet plant, which would enable these companies to source their raw materials and also benefit from the shipping infrastructure planned by Vale. He added that Bagon Datoh heavy industrial park will take development in Perak to a new level. The proposed industrial park is expected to have a spillover effect in Perak, which would take the state's development to another level.

KYM signed a memorandum of understanding via its subsidiary with Perak State Development Corporation on December 1st 2010 for the establishment of the heavy industrial park. The agreement would involve the reclamation of an area of about 3,400 acres and the construction of infrastructure requirements, including a jetty or jetties.

On the contract awarded by Vale International for the provision of consultancy services for the acquisition of land and development, Chong said the contract was just a kick start project for the company and that more announcements would be made when things were finalized.

Mr Chong said that "We intend to participate in the operation of the jetty as well as its ownership. We are exploring the possibility of further collaboration with Vale International now and wish to conclude the deal in the next four months."

It has been reported that Vale plans to invest MYR 9 billion in an iron ore distribution centre for Asia on the land it had bought. The land was sold by KYM's 54% owned Harta Makmur Sdn Bhd to Vale for MYR 196 million cash last year. Central to the project will be a pelletizing plant, which converts raw iron ore into pellets that are used in steel production. The finished products will be distributed to customers in the Asian region.

A 2.3 kilometer jetty project is also in the works for the easy ferrying of iron ore and coal. The completed jetty is expected to be able to accommodate ships of 400,000 deadweight tonnes with handling capacity of 30 million tonnes of iron ore in the initial phase.

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