ESG turns Malaysian aluminium smelter into a winner

Kuala Lumpur

AS the world's biggest glove maker stumbles because of environmental, social and governance (ESG) concerns, a metal producer's focus on ESG practices has made it a darling among investors.

Press Metal Aluminium Holdings surged 18 per cent in the March quarter to become the best performer on Malaysia's benchmark stock index.

Shares in the company, whose plants run on hydropower, have rallied amid higher prices of the metal and bets that its products made with a smaller carbon footprint will be in demand.

The global decarbonisation agenda and rising investor interest in ESG factors have put South-east Asia's biggest aluminium smelter in a sweet spot.

China is trying to meet a goal of carbon neutrality by 2060, leaving aluminium producers that run on coal-fired power in the government's cross-hairs. The company's hydro-run smelter means it uses renewable energy to produce the metal, which bodes well with ESG-centric clients, Low Jin Wu, an analyst at Hong Leong Investment Bank, said in a report.

"Press Metal tops when it comes to ESG because of their strategic decision to position themselves in Sarawak with rich hydro-power as their power backbone," said Chua Zhu Lian, investment director at Fortress Capital Asset Management. "There's a scarcity of low-carbon aluminium makers globally."

Shares of Press Metal have doubled from its October low to RM10.06. They climbed 1.6 per cent at the close on Thursday. The company is now the eighth-biggest by market value in Malaysia's stock gauge, surpassing Top Glove.

A year ago, Press Metal languished in the bottom five, while Top Glove at one point in October was close to becoming the nation's most valued firm. Top Glove shares have tumbled 24 per cent this year as vaccine rollouts weaken its appeal.

The rout deepened this week after the US Customs and Border Protection ordered personnel at US ports of entry to seize its gloves over allegations of forced labour.

That is a blow to Top Glove and comes as Malaysia's key industries - palm oil and gloves - grapple with intense scrutiny over poor labour practices. BLOOMBERG