Ho Wah Genting unit seeks to raise RM90m

COMMERCE Venture Magnesium (CVM) Sdn Bhd, a unit of Ho Wah Genting Bhd (HWGB), plans to raise some RM90 million from an initial public offering to fund working capital and expansion, its top official said.CVM, which makes magnesium ingots and mines for dolomite (a formation of limestone that contains magnesium), will be listed on the Hong Kong Stock Exchange's main board in the second quarter.Magnesium is used as a major component of die-casting alloys, which are used to make car parts and even computers.CVM is setting up a RM180 million magnesium smelting plant in Sg Siput, Perak, on 26ha owned by Perbadanan Kemajuan Negeri Perak (PKNP).
It has exclusive rights from PKNP's unit, Harta Perak Corp Sdn Bhd, to mine and extract dolomite from two limestone hills in Sg Siput for 20 years.PKNP holds 10 per cent of CVM. HWGB and Tsorng Shin Machinery (M) Sdn Bhd own 55 per cent and 10 per cent respectively."The plant, which will commence in December, will have an initial production capacity of 15,000 tonnes of magnesium metal a year, which will be doubled in 2010 to full capacity," HWGB chief executive officer and managing director William Teo said."We expect HWGB's net profit to double in 2009 as we can equity account the earnings from CVM when the plant rolls out the production," he added.CVM will earn revenue of US$60 million (about RM191 million) a year based on the current price of US$4,000 (RM12,720) a tonne. This will double in 2010 when the plant reaches its full capacity.It has five agreements with independent third parties from the UK, the US, South Korea, Japan and Singapore to sell its entire output.Teo did not rule out establishing a second plant in China, which produces more than 70 per cent of the world's total magnesium output.Global demand for magnesium metal is expected to increase to 900,000 tonnes a year in 2010 from 700,000 tonnes in 2006.CVM's magnesium plant in Sg Siput is the first of its kind in Southeast Asia and will make the company a leading exporter of the metal in the region.www.btimes.com.my