ABM Fujiya to set up battery recycling plant in Kuching

KUALA LUMPUR (July 24, 2013): Homegrown automotive battery maker ABM Fujiya Bhd, which debuted on the Main Market of Bursa Malaysia yesterday, plans to set up its first battery recycling centre in the country in a move to secure the supply of lead, a main raw material for battery production that is currently outsourced, said its deputy managing director Datuk Tay Tze Poh ( pix).

The move is also to minimise the risks associated with the fluctuation of lead prices.

"One of our plans is to set up a (battery) recycling factory in Kuching so that we can resell the supply in terms of raw materials, which is lead - the main product used in battery production," he told a press conference after the group's listing ceremony here yesterday.

"We're already in final discussions with two key contractors (suppliers of lead recycling machinery and technical support)."

ABM Fujiya plans to start construction on the plant in two to three years. Currently, the Kuching-based company mostly obtains its supply of lead overseas.

According to the group's prospectus, the construction cost of the plant is estimated to be RM3.8 million. Upon completion of the new plant, it estimates to enjoy cost savings of between 15% and 30% per tonne of secondary lead.

At the optimal level of the lead recycling plant, in three to four years when it is production efficient and economies of scale, the group would be able to reduce its import of secondary lead by 50% to 60%.

Tay said the demand for auto batteries is there, but the fluctuation of lead prices will affect every battery manufacturer.

Today, the group has four battery production plants in Kuching, with an annual production capacity of 1.6 million batteries. Utilisation of these plants is at 66%.

The group, which currently exports to 50 countries, also intends to venture into markets like South America, Europe, Indochina (Myanmar and Cambodia).

The export markets contribute some 48% of its revenue. Locally, it has a 7.9% share of the battery manufacturing market.

Yesterday, ABM Fujiya shares opened at a 5 sen or 8% premium at 65 sen above its issue price of 60 sen on its debut. The stock closed at up 2 sen or 3.33% to 62 sen, with some 25.24 million shares traded.

"The price is on the upper side now, this is why our future plan is to set up our own recycling plant so that we will not rely so much on outsourced lead suppliers," said Tay, adding that lead prices are hovering at US$2,100 per tonne now.