SUMATEC Resources Bhd is venturing into the mineral resources business this year as part of the group’s massive diversification plan to broaden its earnings base, managing director James Chan said. 

He said the group would invest US$20mil to US$30mil in the mineral resources business. 

“We are investing in mineral resources because mineral prices are very lucrative and will bring in high profit margins,'' he told reporters after the company AGM in Kuala Lumpur yesterday. 

Sumatec, which is mainly involved in engineering, procurement, construction and commissioning (EPCC), is diversifying into the energy-related sector. 

It recently acquired four Sarawak-based shipping companies which have a combined fleet of six coastal oil tankers with a total capacity of 33,000 tonnes, making the company the fourth largest oil tanker player in Malaysia in terms of tonnage. 

Chan said there was great potential in fuel transportation and logistics business, particularly in coastal oil tankers. 

“By 2007, we will have a 10-ship fleet with a total capacity of 63,000 tonnes. We expect the diversification into marine transportation and logistics, renewable energy, hazardous waste management, and oil storage and terminal links to be fully in place by end-2007,” he said. 

Sumatec expects the coastal oil tanker business to contribute RM50mil to group turnover this year, with the EPCC business remaining the core contributor, with about RM150mil. 

The group's order book now stands at RM400mil, which would sustain it for the next two years. It is also bidding for several projects worth over RM1bil, locally and overseas. 

“We recently secured a RM98mil EPCC contract from Kemaman Bitumen Company Sdn Bhd to construct asphalt refinery facilities at Kemaman, Terengganu,” Chan said, adding that the company had also been awarded a RM5.1mil contract in Maldives and a RM10mil job by Shell Refining Co Bhd. 

Sumatec will set up an oil terminal for leasing in Tanjung Pelepas Port, Johor. The RM300mil facility is expected to be fully operational by mid-2007.  

“The lease of the terminal is estimated to generate revenue of more than RM500mil and provide us with a sustainable stream of revenue for the next 20 years,” Chan said. 

“Once our diversification plan fully takes off, we hope to reward our shareholders with a dividend payout, possibly by financial year 2007,” Chan said.