KUALA LUMPUR (Oct 9): PMB Technology Bhd (KL:PMBTECH), a 58.78%-owned subsidiary of Press Metal Aluminium Holdings Bhd (KL:PMETAL), plans to invest RM650 million to build a silicon-aluminium (Si-Al) alloy plant in Sarawak as the group seeks to diversify away from a struggling silicon metal business.

The aluminium product maker said the proposed plant would be located at Samalaju Industrial Park, where the group’s existing silicon metal manufacturing operations are based.

Construction is expected to be completed, with commercial operations commencing, by the second quarter of 2027, PMB Technology said in a bourse filing on Friday.

The proposed diversification comes as prolonged weakness in silicon metal prices and subdued demand weigh on the group’s earnings. PMB Technology’s net profit has deteriorated from RM44.75 million in the financial year ended Dec 31, 2023 (FY2023) to a net loss of RM12.83 million in FY2025.

The group’s losses widened in 1HFY2026, with a net loss of RM48.16 million compared with a net profit of RM4.66 million a year earlier.

PMB Technology said the silicon metal industry continues to face structural oversupply and weak downstream demand, with prices expected to remain depressed in the near term. Volatility in the US dollar also poses a risk to earnings, as most of the group’s silicon metal sales are denominated in the greenback.

Against this backdrop, the group intends to reposition its operations towards Si-Al alloy smelting, targeting applications in the aerospace and automotive industries. It expects the move to broaden its earnings base and reduce its reliance on silicon metal manufacturing.

It noted that global demand for Si-Al alloys remains broadly stable, supported by low inventory levels and applications related to clean energy. Si-Al alloys are used in the aerospace and automotive industries.

The proposed diversification would involve reallocating part of the group’s power capacity to Si-Al alloy production and partially suspending its silicon metal manufacturing operations. The move is intended to optimise the use of long-term power supply secured for energy intensive manufacturing.

PMB Technology also plans to take a more selective approach to construction projects and may gradually scale back its construction activities, depending on the completion of existing projects, market conditions and the availability of suitable opportunities.

The new business will be led by a team including Joyce Koon Hui Ginn, the daughter of chief executive officer Datuk Koon Poh Ming; Leslie Koon Tzer Peng, the CEO’s son; Goh Chii Yew, a special support officer to the CEO; and Lim Hui Kien, assistant plant manager at PMB Silicon Sdn Bhd.

The proposed diversification is not expected to have an immediate impact on earnings but is anticipated to contribute positively to future earnings, PMB Technology said.

The plan is subject to shareholder approval at an extraordinary general meeting. AmInvestment Bank Bhd is the principal adviser.

PMB Technology shares closed unchanged at RM1.70 on Friday, giving the group a market capitalisation of RM3.22 billion. The stock has gained 46.55% so far this year.