Press Metal Aluminium Holdings Berhad SECTION 2 • MESSAGES FROM OUR LEADERS 18 Management Discussion and Analysis by Group CEO Despite these challenges, the aluminium market remains balanced as new supply is limited and demand is supported by rising investments in green sectors such as renewable energy infrastructures, EVs, grid infrastructure and battery storage. These emerging applications, alongside traditional uses in construction and transportation, continue to drive demand for aluminium. Press Metal is well-positioned to ride on this growth, thanks to our low-carbon aluminium solutions, integrated production capabilities and efficient cost model. By aligning our strategies with the broader industry trends, we are enhancing our competitiveness and ensuring long-term resilience in an increasingly dynamic market. We have made significant progress in bolstering our upstream integration in recent years, particularly for alumina, the crucial raw material for aluminium production. PT BAI now boasts a capacity of two (2) million tonnes per annum with plans to expand by another two (2) million tonnes within two (2) years, bringing capacity to a total of four (4) million tonnes per annum. PT BAI, via its holding company, Nanshan Aluminium International Holdings Ltd. has also recently completed its Initial Public Offering and is now listed on the Hong Kong Stock Exchange, raising funds for its expansion. In September 2024, we announced equity participation of 80% in a new alumina refinery, PT KAN in Indonesia. The refinery is expected to come on stream in two (2) years, with an annual production capacity of 1 to 1.2 million tonnes per annum with potential to increase this capacity in the future. Our upstream expansion will increase our alumina leverage substantially and boost our competitive edge across the aluminium value chain. It is an effective approach towards ensuring higher self-sufficiency and a stable supply of our alumina needs, which are critical to our core smelting operations. This will also reduce our reliance on third-party suppliers and traders, ensuring greater operational resiliency and efficiency. With the close proximity of the refineries in Indonesia to our smelters in Sarawak, we anticipate cost savings that will further optimise our overall operations. Strengthening Upstream Presence Our downstream extrusion segment has strategically positioned itself to harness the immense potential of the renewable energy sector by delivering innovative, product-based solutions. In Malaysia, we have begun supplying and are also in the development phase with several new clients for solar panel frames. These advancements in providing extrusion solutions to the renewable energy sector highlight our capability to adapt to evolving market demands in downstream activities. The vast potential in this sector is further demonstrated by our recent Memorandum of Understanding (“MoU”) with the Bintulu Development Authority to develop a solar frame extrusion facility in Bintulu, Sarawak, which is expected to be operational by mid-2026. This project aligns with Press Metal’s broader vision to expand our low-carbon aluminium applications and reinforces our role in supporting global energy transition efforts. Harnessing Potential of the Renewable Energy Sector We are strengthening our position as a sustainable aluminium producer by forging strategic partnerships with global industry leaders. In 2023, we signed a five (5) year supply agreement with Daching Enterprise, one of the world’s top three (3) aluminium foil suppliers. Building on this momentum, we recently inked a multi-year contract with Novelis, the world’s largest aluminium recycler and a leader in low-carbon flat-rolled aluminium products. Under this agreement, we will be supplying our GEM™ low-carbon aluminium, further solidifying our role as a trusted partner in the global shift towards greener industrial practices. Partnerships with Global Industry Leaders The demand for low-carbon aluminium is growing rapidly, driven by automotive, packaging, renewable infrastructure and construction industries, as global brands increasingly prioritise sustainability in their supply chains. This shift is driven by regulatory pressures, consumer demand for environmentally responsible products and corporate commitments to achieving net-zero emissions. In sustaining the decarbonisation shifts, in 2024, we introduced our low-carbon aluminium under the brand name, GEM™, with a carbon footprint of less than 4.0 metric tonnes of CO2e emissions per metric tonne of aluminium (Scope 1 and Scope 2 GHG emissions). GEM™ offers a sustainable alternative for industries seeking to reduce their environmental impact without compromising on performance. Looking ahead, we aim to expand our low-carbon product portfolio to support our customers’ sustainability goals further. Low-Carbon Aluminium Solutions STRATEGIC FOCUS AREAS
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