Is it only OMH investors who realise the importance of low power costs in the production of ferro alloys.
OMH management built the ferro alloy plant in Sarawak at the SCORE industrial estate for the most important reason ..... CHEAP POWER.
The power is supplied to State owned utility body Syarikat SESCo Sdn Bhd for 6.25 sen/KWh ( US$0.016c/KWh ) with a 1.5% annual increase, the power is then on sold to OM Sarawak at 14sen/KWh or US$0.035c/KWh . This is where OM Sarawak has a huge advantage over many other ferro alloy smelters. You can see now why the likes of GMC will never be a competitive or profitable smelter with power costs more than triple and likely to increase even further.
Higher demand for power
Bakun is the world’s second highest concrete-filled dam (at 228m above sea level) after China’s Shuibuya dam (233m).
Sarawak Hidro, which is owned by the Ministry of Finance Inc, is selling power from Bakun at 6.25 sen per kilowatt hour (kWh) with an annual increase of 1.5 per cent for 30 years under an agreement signed with SEB’s wholly-owned unit, Syarikat SESCo Sdn Bhd (the state-owned utility body), eight months ago.
The Sarawak government has imposed a water levy of one sen/kWh or about RM150mil per annum on Sarawak Hidro. SEB would earn a minimium revenue of RM112mil this year from power sale.
According to SEB chief executive officer Torstein Dale Sjotveit, demand for Bakun electricity from the Sarawak Corridor of Renewable Energy (SCORE) investors had exceeded the amount that it could supply.
SEB has inked power purchase agreements with OM Materials (Sarawak) Sdn Bhd and Asia Minerals Ltd (AML), two of the first batch of four SCORE pioneer investors.
OM Materials, a 75:25 joint venture between OM Holdings Ltd and Cahya Mata Sarawak Bhd (CMSB), is buying 500MW for 20 years to power its US$500mil manganese and ferrosilicon alloy smelting plant in Samalaju Industrial Park, Bintulu.
