Malaysian power, more than a bargain for Sarawak

One reader asked how cheap was Sarawak’s power and another very knowledgeable reader replied. It’s VERY VERY cheap.

Cost of power in Sarawak for OM Holdings is 13.8sen/KWH = US$0.03c/KWh  Amount of power used to produce one tonne of ferro silicon is 9,000KWh making a total cost of US$270 .
In China however the power costs are double  at US$0.06c/KWh taking the cost of power to US$500/tonne, which is 50% for the cost of production. The raw materials are cheap its the considerable power that used which is expensive. This is where OM Holdings is  the lowest  cost producer in Asia.
The power sold to OM Holdings is very cheap by world standards, its interesting to see however the profit that Sarawak Energy is making on the 20 year contract with OMH, as they only pay half the amount that they charge.
“Sarawak Hidro, the developer and manager of the Bakun hydroelectric power project, sold power at 6.25 sen per kW, with a 1.25% annual increase, to Sarawak Energy, “

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alanpatrickryanChee Heng KingJavier BULLÓN Recent comment authors

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Sarawak has a very good price, but some other worldwide plants can have close the same, even lower depending of the exchange rate. The one’s unbelieveblae is 60 $/Mwh in FeSi in China. In western standard at this price the plant will be closed and if for the silicon metal in China the price is the same they are outside the market. Someone can understand in China seems easier to produce silicon than ferrosilicon ?. the silicon consume 40% more in electricity and the quartz arability for high quality is harder, Something is difficult to understand in China.

Chee Heng King
Chee Heng King

You see the ballooning corporate debt in China. Thats how it can continue. Many of these smelters in China probably have dedicated electricity or spare capacity of electricity that is sold cheaply as there has been overbuilding of power plants, how long these subsidies can last is hard to say.

How sustainable Chinas production is hard to say, but electricity costs in Samalaju Industrial park/Sarawak are almost at the cost of what it takes to maintain and run a coal power plant.

Hydropower has operation and maintenance cost of coal power plants, but without the fuel cost. Ie:coal.