About RM61.7 billion worth of infrastructure projects could be awarded over the next six to 12 months, AmResearch Sdn Bhd said.
The research house said yesterday that the largest chunk of the projects would be the RM30 billion light rail transit (LRT) extension in the Klang Valley.
They are for the extension of the Ampang/Kelana Jaya line and new Cheras-Kota Damansara line. The companies expected to be in the running for the civil works are the UEM Group, MMC CORPORATION BHD, GAMUDA BHD, IJM Corp Bhd, WCT BHD and MRCB.
The second largest project will be the RM14 billion undersea transmission cable from Bakun dam in Sarawak to the peninsula. The project will be awarded by the federal government and the potential contractors are MRCB and foreign entities.
AmResearch said another project expected to be awarded in the period is the RM5 billion Gemas-Johor Bahru double-tracking project initiated by the federal government. The potential contractor would be Global Rail Sdn Bhd and China Infraglobe Consortium.
The other projects are the tunnelling works for the RM1.3 billion Pahang-Selangor raw water transfer, which are likely to be undertaken by members of the Shimizu-Nishimatsu-UEM-IJM consortium.
Also in the pipeline is the RM4.5 billion Langat 2 Water Supply Scheme, where the water transfer project is expected to be undertaken by Gamuda Bhd and Loh & Loh Bhd. The piping is likely to be undertaken by JAKS Resources Bhd.
“We continue to remain overweight on the steel sector as an anchor reflationary theme. Unlike cement, prices of steel are at the early stages of a cyclical upswing.
“Furthermore, earnings of local steel companies should gain traction as domestic steel demand supplants exports moving into 2010. Within the sector, we continue to like ANN JOO RESOURCES BHD [ ] for leverage to rising steel prices,” it said.
AmResearch cited a news report that BHP Billiton had inked an agreement with Rio Tinto to set up a US$116 billion (RM394.4 billion) joint venture that will combine their Western Australian iron ore operations.
“We understand that a BHP-Rio Tinto marriage in Australia will result in savings on capital and operational costs worth at least US$10 billion a year,” said the research house.
The mining giants each operate extensive rail and port facilities in Western Australia, particularly in the resource-rich Pilbara region.
Both parties expect the deal to be consummated within the second half of next year. Such a move will likely solidify the bargaining leverage of two of the world’s top three global iron ore producers.
By merging their resources in Australia, both BHP and Rio Tinto would have a combined iron ore production of 350 million tonnes. If BHP’s expansion plans remain on track, this would rise to 375 million tonnes next year.
AmResearch said this could have a significant impact on the bargaining leverage of steel millers all around the world, including Malaysia.
Select local players that purchase iron ore as part of their feedstock include Perwaja Holdings — the steel-making arm of the Kinsteel Group — and the Lion Group.
Meanwhile, the research house gathered that Ann Joo Resources Bhd was looking to secure future supply of iron ore ahead of the rollout of its new blast furnace by July 2010.
source The Edge Financial Daily, December 8, 2009.
