For mining industry veteran Dato’ Sri Pek Kok Sam, the one lesson from childhood that still reverberates through his life today focuses on ethics.

“My late grandmother taught me that honesty is the bedrock of trust and trustworthiness,” said the Executive Director and Chief Executive Officer of SGX-listed high-grade iron ore producer Southern Alliance Mining Ltd.

“The moral command to be honest requires us to speak and act only in ways that engender and justify trust, which must be earned. There aren’t any ethical shortcuts in business or life - honest business practices build foundations of trust with staff, customers, competitors, as well as every other individual and entity.”

Pek, who graduated from Sultan Abu Bakar School in Kuantan with a Sijil Pelajaran Malaysia (Malaysian Certificate of Education) in 1985, was conferred the title of “Dato” in 2011 and “Dato’ Sri” in 2016 by the Sultan of Pahang in recognition of his contributions to the development of football as a sport in the state.

The 54-year-old, who has nearly two decades of experience in the mining and exploration of iron ore, tin and limestone, began his career selling machine spare parts during the 1980s, when heavy industries flourished in the Malaysian economy.

“As many of my customers were from the mining, quarrying and logging industries, I became fascinated with mining and quarrying activities. Mining has also played an integral role in the development of the Malaysian economy, following the expansion of tin mining in the 1870s,” Pek recalled.

“Conversations with my customers about how rocks and minerals can be extracted and processed and turned into something useful, inspired me to look deeper into mining. After some serious thought, I decided to go the whole nine yards and join the sector.”

Thus, Southern Alliance Mining began its journey, with the inception of Honest Sam Development in 2001. Honest Sam started operations by undertaking sub-contracting works for limestone mines in the states of Pahang and Perak. In 2008, it obtained the rights to be the operator of Chaah Mine in Johor.

In 2018, Honest Sam’s board of directors began evaluating the option of listing on SGX. Southern Alliance Mining was established in 2019 as a listing vehicle following a restructuring exercise, and made its trading debut on SGX Catalist in June 2020.

Diversifying Risk

Today, Southern Alliance Mining, headquartered in Pahang, is involved in the exploration, mining and processing of iron ore for subsequent sale. The Group sells iron ore concentrate with low level of impurities and total Fe grade of 62% to 65% to steel mills as well as trading companies located mainly in Malaysia and China. It also sells pipe-coating materials that are crushed iron ore with a natural characteristic of higher density for subsea pipes.

The Group’s primary mining asset, Chaah Mine, is an open-pit mine consisting of two mining leases. It covers an aggregate area of 225.7 hectares, and is strategically located near road networks linked to ports. 

The Group’s established supporting infrastructure comprise four fixed crushing plants, two lines of mobile crushers and two beneficiation plants. Its approximate monthly production capacity is 60,000 tonnes of iron ore concentrates, not including pipe-coating materials.

Looking back, Pek is thankful that iron ore from its Chaah Mine possesses unique, natural characteristics, such as high specific gravity and viscosity, which makes it a well sought-after raw material for pipe coating. The fact that the ore contains a low level of impurities also allows the Group to produce high-grade iron ore concentrate - up to Fe grade of 65%.

“If demand for pipe-coating material declines when the oil and gas sector undergoes a downturn, we can produce and sell our iron ore concentrate to steel mills,” he pointed out. “By capitalising on the unique characteristics of our ore, we’ve been able to expand our product portfolio and diversify our business risk.”

So far, the industry outlook remains bright. Iron ore prices have risen to record highs in recent weeks, largely because supply has not kept pace with demand in China, where crude steel production has grown by 30% over the past five years, according to data from S&P Global Platts Analytics. News of further output reductions for environmental reasons are further boosting an already overheated market.

“Since 2018, Malaysia has reversed its role as an iron ore and concentrate exporter, and demand within the country has since greatly exceeded supply. Coupled with the recent recovery of the oil and gas industry, we’re hopeful that demand for pipe-coating materials will rebound soon,” Pek noted.

“In the medium term, as long as there is underlying steel demand and margins remain positive, we expect to see continued strength in iron ore prices.”

Exploring Potential

The Group continues to expand the production capacity of its present mine, as well as improve its supporting infrastructure and facilities, by investing in machinery equipped with cutting-edge technology and software. “We’ve been actively developing our mine face, as present profits are able to absorb the impact from the hike in mine development costs,” Pek added.

And as Malaysia’s iron ore industry is large enough to accommodate all miners in the country, Southern Alliance Mining doesn’t need to fight for market share. “But we do compete for resources, and we are aggressively seeking new iron ore resources,” he pointed out.

In addition to its Chaah Mine, Southern Alliance Mining has also been granted the right to carry out exploration and mining operations at four potential iron ore mines in Johor. 

Last month, the Group announced it had been granted the fourth lease for the mining of iron ore on a new plot measuring approximately 394.81 acres, located in the Muar District and belonging to DYMM Sultan Ibrahim Sultan Iskandar of Johor. 

It plans to step up exploration activities at these assets to identify mineral deposits for further business growth. “We’re constantly looking for avenues to grow, both organically and inorganically. The Group is also open to opportunities to venture into the mining of other minerals, subject to shareholder approval,” he noted.

“Once we’re able to report more reserves from other mines, we’ll be able to mitigate the risk of relying solely on our Chaah Mine for revenue.”

Since its initial public offering, Southern Alliance Mining has received several business proposals, including an offer to carry out mining, as well as a potential acquisition of new mining rights, not limited to iron ore, and which includes other minerals. 

“Currently, we’re still evaluating these offers, and will release more details as and when there are material developments,” he added.

The Group is also focused on developing its Environmental, Social, and Corporate Governance (ESG) strategy. It has appointed a consultant and formed a committee to draft a sustainability report. 

“Sustainability in the mining industry translates to the development of a long-term health and safety culture among staff, contractors and vendors,” Pek noted. “The environment and surrounding community should also not be neglected.”

Meanwhile, what keeps this father of two awake at night are the high expectations that employees, colleagues and stakeholders have of him.

“Many look to me to set and achieve challenging goals, take fast and decisive action when needed, outperform the competition, and inspire others to perform at the highest level they can,” he said. 

“I constantly worry that I will disappoint shareholders and stakeholders with an unsound decision or strategy. But I always remind myself that I have done, and will continue to do, my best, as well as prioritise the safety of our workers and future growth of the company.”

Not surprisingly, perseverance and principles are his touchstones. “I make it a point to stand with my convictions, my beliefs and my truths,” Pek noted with a smile. 

“Hold fast, stay true, and you will not only survive the storm, you will emerge stronger, because of how you made it through.”
 

Southern Alliance Mining Ltd

Southern Alliance Mining, an established producer of high-grade iron ore products in Malaysia, is listed on SGX Catalist. Headquartered in Pahang, the Group is involved in the exploration, mining and processing of iron ore for subsequent sale. The Group sells (i) iron ore concentrate with total Fe grade of between 62% and 65% to steel mills and trading companies mainly located in Malaysia and China; and (ii) pipe coating materials that are crushed iron ore with a natural characteristic of a higher density for subsea pipes. The Group’s primary mining asset, the Chaah Mine, is an open pit mine consisting of two mining leases and covering an aggregate area of 225.7 hectares. The Group’s established supporting infrastructure and facilities consist of four fixed crushing plants, two lines of mobile crushers and two beneficiation plants. The Group has an approximate monthly production capacity of 60,000 tonnes of iron ore concentrates (not including pipe coating materials). In addition to the Chaah Mine, the Group has also been granted the right to carry out exploration and mining operations at three potential iron ore mines located in Johor, Malaysia.

The company website is: southernalliancemining.com

Click here for the company's StockFacts page.

For the half year ended 31 January 2021 financial results, click here.

 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic
Photo: Company file

kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.

For previous editions of kopi-C: the Company brew, please click here.  

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