KUALA LUMPUR (Nov 1): Manganese ore and ferroalloy producer OM Holdings Ltd's unit is disposing of  90% of its 100% stake in OM Materials (Qinzhou) Co Ltd (OMQ) for US$25 million (RM119.49 million).

In a filing to Bursa Malaysia, OM Holdings said its wholly-owned OM Materials (S) Pte Ltd (OMS) is selling the 90% equity interest in OMQ to Beijing Kunpeng Hongsheng Metal Co Ltd, which is involved in the trading of ores and alloys in China.

Upon completion of the sale — slated to be completed by Nov 30 — Beijing Kunpen and OMS will hold the equity shares in OMQ on a ratio of 90:10.

“The proceeds from this sale will be used partly for working capital needs and the capital expenditure [capex] of the OM Holdings group.

“The board believes the sale of OMQ’s equity interest will unlock value for the company and allow the redeployment of capital to OM Holding’s core business operations,” said the group.

OM Holdings said it will retain a  strategic relationship with the new entity and continue to provide marketing and procurement services.

OMQ owns a manganese alloy smelter in Qinzhou in China's Guangxi province. It is located 1km from the Qinzhou port, providing OMQ an advantage to ease of access to seaborne manganese ore, according to the group’s annual report.

OM Holdings, which is listed on both the Australian Securities Exchange and Bursa Malaysia, is engaged in the business of trading raw ores, smelting and marketing of processed ferroalloys.

Shares in OM Holdings finished two sen or 1.36% lower at RM1.45 on Wednesday, giving the group a market capitalisation of RM1.07 billion. The stock has fallen by 29.95% year-to-date.

This article has been updated to omit an earlier image. The manganese mining operation in Gabon, Africa is not affiliated with OM Holdings' core business activities. The error is regretted.