Monday, April 18, 2011

Malaysia's Resource-Rich Sarawak State

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18/04/2011 (Reuters) - Malaysia's Sarawak state, which goes to the polls on Sunday, is rich in resources such as natural gas, timber and crude palm oil.

Following is a summary of the key commodities and projects in the state located on Borneo island:

OIL & GAS

* National oil company Petronas operates one of the world's largest liquefied natural gas (LNG) complexes in Sarawak with eight production trains that have an annual capacity of 24 million tonnes.

* Shipments of Sarawak's LNG meet a large chunk of demand from South Korea, Taiwan and Japan. In 2007, LNG from Sarawak was also shipped to China.

* Petronas said it discovered new fields offshore Sarawak that had 100 million barrels of oil and 0.2 trillion standard cubic feet of gas in place. The discovery could see oil majors such as Shell (RDSa.L: Quote) and ExxonMobil ask for more production-sharing contracts.

TIMBER

* Malaysia is the world's fourth-largest exporter of tropical timber with the bulk of the shipments coming from Sarawak where most of the timber barons have their company headquarters.

* Exports are falling as Sarawak now allows only 40 percent of the state's production to be shipped out, while 60 percent must be used for the domestic timber processing industry.
* Analysts have raised their target prices for Sarawak timber firms such as Rimbunan Hijau Group's listed unit Jaya Tiasa , WTK and Samling as Japan will need timber to rebuild after the March 11 earthquake and tsunami.

* Some investors are shunning several of these firms based on their environment track record. Norway has barred its $550 billion sovereign wealth fund from investing in Samling and its unit Lingui Development over allegations of environmental damage in Sarawak.

PALM OIL

* Sarawak accounted for more than a tenth of total palm oil production of 17 million tonnes in 2010. Key planters in the state include Sarawak Oil Palm and Sime Darby . Malaysia is the world's No.2 palm oil producer.

* Last week, an industry body for eco-friendly palm oil censured IOI Corp for green and social violations in Sarawak and threatened further sanctions if the planter did not resolve the issues.

* Wetlands International and Dutch remote sensing institute Sarvision said large areas of carbon rich peatswamp forests were being destroyed in Sarawak to make way for estates.

POWER GENERATION

* Sarawak plans to double its hydropower capacity to 6,000 megawatts (MW) in 2015 by building five more dams to complement the Bakun and Murum dams that have a combined capacity of more than 3,000 MW.

* State government officials have declined to name a price for the expansion but they are counting on investors like China's state run power grid operator to help build the dams to exploit Sarawak's rivers.

* Sarawak Energy, which manages the power assets in the state, said it was in talks with 20 energy customers including smelters and processors on power tariffs.

SMELTERS

* Several big ticket aluminium projects have been announced but none has been confirmed pending the finalisation of the power purchase agreements, which could take place at the end of 2011.

* The biggest is Rio Tinto's $2 billion smelter joint venture with Cahya Mata Sarawak . The plant will have an initial annual capacity of 720,000 tonnes with an option to expand to 1.5 million tonnes.

* Another mega project is the 330,000-tonne aluminium smelter by Aluminium Corp of China with a local partner that is estimated to cost $1 billion.

* Projects in the pipeline include Australian OMH's proposed manganese plant in Sarawak and Tokuyama's planned $780 million polysilicon processing plant. [ID:nL3E7FE2DN]

* Press Metal has started operating its 120,000- tonne capacity aluminium smelter in Sarawak in which Japan's Sumitomo Corp has an equity stake. The plant is set to be the first customer of power from Bakun dam. The Malaysian firm also has a second phase expansion plan for a 240,000-tonne capacity plant in Sarawak.

PRECIOUS METALS

* Canadian miner Olympus Pacific Minerals has raised its stake in a small gold field in Sarawak that has about 1.8 million ounces in reserves. 


Sarawak
Geology of North-West Borneo: Sarawak, Brunei and SabahWild Borneo: The Wildlife and Scenery of Sabah, Sarawak, Brunei, and KalimantanSarawakA Sleeping Tiger: Ethnicity, Class, and New Dayak Dreams in Urban SarawakMy Life in Sarawak (1913 )The Natives of Sarawak and British North Borneo: Based Chiefly On the Mss. of the Late H. B. Low, Sarawak Government Service, Volume 1People on the Move: Rural-Urban Interaction in Sarawak (Kyoto Area Studies on Asia; Center for Southeast Asian Studies, Kyoto University)Of Free Trade and Native Interests: The Brookes and the Economic Development of Sarawak, 1841-1941 (South-East Asian Historical Monographs)

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