On June 26, I've posted that Integrax may benefit from the setting up of an iron ore pelletizing plant in Manjung, Perak. To wit, Vale International SA, the world’s second largest diversified metals and mining company, has agreed to buy 165.5ha in Manjung, Perak, from property developer KYM Holdings Bhd. In addition, Vale had an option to buy another 305.95ha, putting the total amount of land available to Vale at 471.46ha in Manjung. It has plans to invest RM9bil in an iron ore pelletizing plant on the site. Pelletizing of iron ore is the process of converting the raw ore into pellets with characteristics appropriate for use in a blast furnace. If this plant takes off, the importation of iron ore to the plant will likely to benefit Integrax's existing 2 port facilities- Lumut Maritime Terminal & Lumut Bulk Terminal- significantly.
The above highlighted statement is incorrect. It seems that the whole project encompasses a private jetty, where the raw iron ore that Vale would be importing (and, the pellets that it could be exporting/shipping out) would pass through. However, all is not lost. I expect the increased electricity consumption would result in more coal shipment being imported by Malakoff's Lumut power plant and all coal shipments pass through one of its port. This error was first pointed by by a reader (hat tip to KLSE). The same information also appeared in a recent article entitled "Possible boon for Integrax" in the Edge newsletter.
Hi ALex,
ReplyDeleteSth I dont quite understand.
On one hand, it says the project will emcompass a private jetty on the properties.
On the other, it says if the project takes off, it will involve the transport and shipment of iron ore from Brazil to Msia. This, efectively, will improve the port's throughput.
Could you please elaborate on this? Thank you very much.
Hi Maverick,
ReplyDeleteBy having its own jetty, Vale will handle the iron ore to be brought in as well as the processed output to be shipped out. This jetty is not part of any one of the 2 ports that are owned by Integrax. This is what I gathered from the Edge report.
Hi Alex,
ReplyDeleteThanks.
But dont you think that the Egde report also paints a bright picture that Lekir Bulk Terminal will be benefitted as throughput will be built up significantly.
It also says that LBT has a water depth of 20m, which can accomodate capsize vessels ... bla bla bla .... all these more or less hint that LBT will be a potential beneficiary .....
I am confused.
basically,integrax has a so called monopoly in perak coast line.They invested heavily on the lbt and protection is given.On vale investment,its long way to go.the price spike is not justified.
ReplyDeleteHi Maverick,
ReplyDeleteThis 'jetty' question is like a itch at a place that one cannot reach. Anyway, I have just spoken to the writer of the article published in the Edge. He doesn't think that a private jetty could not handle a capesize ship transporting iron ore. It is more likely that these ships would use Lekir Bulk Terminal, owned by Integrax. He will try to confirm this point but it is not easy. The entire project may not be a done deal (see the link below).
Look like I am back to where I've started, i.e. Integrax would benefit directly from the iron ore pelletizing plant to be set up by Vale.
http://www.themalaysianinsider.com/index.php/malaysia/29343-rm9b-vale-deal-not-done-yet-admits-zambry
Hi Alex,
ReplyDeleteThank you very much for taking so much of yr time to try to confirm with the writer, and also all the info that you kindly provided here.
Thanks a lot.
Hi Maverick,
ReplyDeleteMy preceding comment includes this statement: "He (the writer) doesn't think that a private jetty could not handle a capesize ship transporting iron ore." The double negative gives the wrong message. It should read as "He doesn't think that a private jetty could handle a capesize ship transporting iron ore."
Hi Alex,
ReplyDeleteThanks for the clarification.
I also dont think that a private jetty could handle large capesize vessels transporting iron ore. As you can see from the picture (click the link below), to accomodate capesize vessels, the berths of LBT have to extend 2KM from the man-made island off the Perak coast.
link : http://www.lumutport.com.my/photo/default.asp?group=4&photo=32963
i have been reading this article many many times and i am still wondering to buy Integrax is a big YES or NO NO.. ?
ReplyDeleteHi Kang Ming,
ReplyDeleteThere are uncertainties about the impact of the iron ore project in Lumut- whether the positive impact will be indirect (i.e. through increased coal import fueled by increased electricity consumption from the iron ore plant) or directly, flowing from the shipments of raw iron ore or pelletized iron ore. In fact, the Vale iron ore project may not be a done deal, where last minute hiccups may still scuttle this project.
Ignoring the pitfalls of the Lumut iron ore project (& the possible windfall from its Philippines nickel mine), one can still find reasons to invest in Integrax. It is a defensive stock, trading at an undemanding PE multiple of 6 times. Its technical outlook is positive as the stock has bottomed & is now in a short-term uptrend. Even at the present price of RN0.64-65, it is fairly safe stock as it has corrected from the recent high of RM0.80. Since this is a buyers' market now, you can afford to wait. A good entry would be at RM0.60-62.