- Following the outbreak of the coronavirus, OM Holdings (OMH) believes there may be a disruption in its supply chain at its smelter complex in Malaysia
- Regional authorities in China have interrupted domestic trucking services to contain the virus and if it continues it could potentially result in the disruption of Chinese sourced material to the plant
- The company has decided to idle two of its 10 furnaces until further notice, putting them on routine maintenance
- However, the remaining furnaces are continuing to operate as normal using existing raw material from the complex
- Shareholders have responded negatively to the news, with OMH’s share price down 5.68 per cent and trading for 41.5 cents
Following the recent outbreak of the coronavirus, OM Holdings (OMH) believes there may be a disruption in its supply chain at its smelter complex in Malaysia.
The new strain of the coronavirus was picked up in Wuhan, China in late December 2019. Since then the number of confirmed cases has risen to 24,324 and 490 people have died in China.
This outbreak is being compared to the 2002-2003 severe acute respiratory syndrome (SARS) outbreak that also stemmed from China and killed roughly 800 people.
Airlines in Europe, North America, Asia and Australia have cancelled flights to and from China and Chinese authorities have shut down travel to and from Wuhan in hopes of containing the outbreak.
For OMH, regional authorities in China have taken precautionary measures to contain the spread of the virus by interrupting domestic trucking services.
If these restrictions are sustained, this could potentially result in the disruption of Chinese sourced raw material supplies to and from OMH’s plant in Malaysia.
For the short term, contingency plans have been formulated to mitigate the potential raw material disruption, and OMH, as a precautionary measure, has decided to idle two out of its 10 ferrosilicon furnaces until further notice, putting them on maintenance as the situation is being monitored.
However, the remaining furnaces are continuing to operate, relying on raw material inventory at the plant.
The company will continue to assess the situation closely and will provide further updates on any raw material supply chain disruption and impact to the plant.
Shareholders have responded negatively to this news with OMH’s share price down 5.68 per cent and trading for 41.5 cents apiece at 1:29 pm AEDT.