Signed Power Purchase Agreement and Joint Venture Agreement for OM Materials (Sarawak) Sdn Bhd to build and operate a Ferrosilicon and Manganese Ferroalloys Smelter

In 2011, CMS announced that it was exploring investment in ferrosilicon and manganese smelting at the Samalaju Industrial Park (SIP). Later, CMS’ wholly owned subsidiary Samalaju Industries Sdn Bhd signed a Memorandum of Understanding (MoU) with OM Materials (S) Pte Ltd (OMS), a wholly owned subsidiary of OM Holdings Ltd (OMH), one of the world’s largest manganese ore producers, which is listed on the Australian Stock Exchange (ASX). This related to the proposal to develop an approximate USD592 million smelting plant capable of producing 600,000 MT of manganese and ferrosilicon per year. In 2012, then Chief Minister Tun Pehin Sri Haji Abdul Taib Mahmud officiated at the signing ceremony of the joint venture. Formed in 2013, CMS Group has a 20% equity stake in OM Materials Sarawak and OM Materials Samalaju while the remaining 80% is owned by OMH. In March that year, OM Sarawak secured full funding for its ferrosilicon production facility (Phase 1) with the sealing of a financing facility worth USD315 million (RM970 million) with four local and foreign lenders. The banks were the Export-Import Bank of Malaysia Bhd, RHB Bank Bhd, Standard Chartered Bank Malaysia and Malayan Banking Bhd. Standard Chartered is OM Sarawak’s financial advisor in the smelting project. OMH announced to the ASX that capital expenditure on Phase 1 was estimated to be USD397 million. As part of OM Sarawak’s obligations under the power purchase agreement with Syarikat Sesco Bhd, a unit of Sarawak Energy Bhd, it has issued Sesco with a performance and payment guarantee and Sesco will supply 500 MW (per annum) to OM Sarawak for 20 years.