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Highlights
- Sims has acquired a new processing facility in Brisbane.
- The acquired land will also allow export shipments as it has access to a deep-water port.
- This acquisition will help Sims to lower its operating cost and maximise profit.
The shares of Sims Limited (ASX:SGM) were spotted trading 2.072% lower at AU$17.48 per share at 10:21 AM AEST on the ASX today (19 May).
The ASX-listed metal recycler today announced about its acquisition of land with deep water port access in Brisbane.
The share price of Sims has gained approximately 10% on the ASX over the past 12 months. On the other hand, Sims’ year-to-date share price also gained almost by 4% at 10:21 AM AEST on the ASX today (19 May).
Details of Sims’ acquisition
Sims today announced its successful acquisition and settlement of a piece of land in Pinkenba, Brisbane. The acquisition is worth a total consideration of AU$88 million, along with an additional stamp duty of almost AU$5 million.
The acquired land will be extremely useful for the company as it is one of the few private deep-water berths in Brisbane that can berth Handymax vessels up to 50,000-tonne displacement. Furthermore, the unique location of the port also offers a long-term possibility to Sims to create the best-in-class and lowest cost metal recycling and resource renewal facilities.
The port will also allow Sims to produce high quality ferrous and non-ferrous metals with an on-site waste treatment and hydrogen generation facilities available easily.
Image source: © Max421 | Megapixl.com
Sims is likely to use the land as a deep-water facility for domestic and export customers in the future as the company will require a minimal amount of capital to prepare the facility. In the long-term game, the company will be developing its business strategies and full-scale operations on this site itself.
Furthermore, Sims is also expecting direct shipments from this facility in FY23. As a result, the company also expects its net benefits through additional revenue and operating cost savings will deliver better earnings for the company than the total investment.
However, Sims is yet to finalise its plans after consulting with the community and the Queensland government. The company’s future development is subjected to a stage-gate approach using a capital lite, scalable model and also excess land divestment at any stage.
Read more: Sims’ (ASX:SGM) dividend more than triples, as 1HFY22 profit soars
About Sims Limited
Image Source © 2022 Kalkine Media ®
Management’s comment
The Managing Director and CEO of Sims, Alistair Field, said that this acquisition was already aligned to the company’s growth plan in the large coastal markets of using top tier processing facilities and bulk export facilities.
Alistair also added that the company intends to fund this land acquisition through recycling surplus and/ or underperforming capital as Sims has identified several long-term beneficial opportunities at this facility.
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