Vale International pouring RM9b into an iron ore centre in Perak?

Brazil's Vale lands Manjung deal. Vale International SA, the world's second largest diversified metals and mining company, has agreed to buy 409 acres in Lumut (Manjung), Perak from KYM Holding Berhad for RM101.9m. In its filing to Bursa, KYM has also granted Vale the right to purchase 756 acres of adjacent land for RM93.7m cash. According to StarBiz, the deal is believed to be related to recent statements by the Perak government of a RM9b South American investment in an iron ore centre in the state. He said that a 526ha site in Manjung had been earmarked for the project, with the built-up area occupying a third of the site, and the remainder landbank serving as buffer zone.

As the land size appears enormously large just to serve as a distribution center, it could spark speculation that perhaps, Vale could also be keen to prospect for minerals.

Micro cap KYM emerges as a major winner in this transaction. The purchase and option price work out to be RM5.70 psf and RM2.80 psf respectively (KYM will have negligible landbank left in Manjung). The value of land sale of RM101.9m (excluding the option) is already significantly well above its market cap of RM55m. Below is some information gleaned from Bloomberg on KYM, which has been nondescript for many, many years.