Alloy Steel International (OTC BB: AYSI) filed this 8-K today:
18-May-2010
Entry into a Material Definitive Agreement
ITEM 1.01 Entity into a Material Definitive Agreement
Manufacturing Capacity Expansion
Highlights
� Industrial land for expansion acquired
� Scalable Modular Plant design
� Improved margins expected
� Improved speed to market
Mr G. Kostecki, Chairman and CEO of Alloy Steel International Inc. is pleased to advise stock holders and the market that on Friday 16th April, the Company signed an agreement for the purchase of commercial and industrial land in Indonesia.
The land of an area of approximately 37,500 square metres (403,646 square feet) is located in Cilegon (see http://www.kiec.co.id/estate_e.html), a port side industrial estate in close proximity to Jakarta, the capital of Indonesia.
The current Arcoplate manufacturing plant in Western Australia with a land area of 4,750 square meters (51,128 square feet) is at full production capacity and has been limited by capacity to service the increasing demand. With the new facilities in Indonesia, the Company will have sufficient space to increase its capacity in-line with market demand for its products.
The new facilities will also better enable the Company’s ability to service increasing client requirements and growth from emerging countries, including Latin America, Russia, India, China and Africa. The Company’s patented modular plant design augurs well for scaling production capacity in line with the anticipated increased demand.
The current Western Australian plant will continue to service the Australian market and the new capacity will supply the rest of the world.
The purpose built plant in the Cilegon industrial estate is expected to also improve operating margins and shorten delivery times to customers. A steel mill is located within the industrial estate, which will provide efficient and cost effective raw materials for the Company. A deep water port within the industrial facility provides efficient access to the Company’s international customers. Furthermore, there are ample skilled and cheap labour available whilst the computerised plant machinery can be controlled and monitored remotely from anywhere in the world, ensuring consistent quality control.
Recall my conversation last December with Alloy Steel’s Greg Muller. Specifically, this part,
New mills:
– The third mill is currently about 3/4ths built. Gregg says these mills take about four months to build and another two months to test. They take that long to build because Alloy Steel builds the mills itself, partly to protect its proprietary technology, and partly because they have to build components that they can’t get off the shelf. Greg estimates the third mill will be producing product by March or April. After that, he believes the company will start building the fourth mill. He says the third mill will be bigger than the second mill. Not sure, but he believes the intent is to finance the construction of mills three and four out of cash flow, as the previous one was.
And this part,
Indonesia:
– The outpost in Indonesia will start as a sales office, which is scheduled to open at the end of January. Greg says it only takes about 12 days to ship product there from Perth. If all goes well, Gregg says the company may build a mill in Indonesia toward the end of next year. If so, that would be the company’s fifth mill.
The company hasn’t given any update on the status of the third mill, or noted whether or not it has started construction of a fourth mill in Australia. Perhaps they decided to build mill number 4 in Indonesia. A recent report on Bloomberg TV noted that blue collar workers in Western Australia are earning more than Aussie physicians now, so I wouldn’t be surprised if Alloy Steel decided build mill #4 in Indonesia instead.
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
