Cahya Mata Sarawak Bhd (CMSB) is once again under scrutiny as minority shareholders raise fresh concerns over its long-delayed phosphate venture and unresolved governance issues that continue to cast a shadow over the group’s strategic direction.
The group’s phosphate operations, housed under Cahya Mata Phosphates Industries Sdn Bhd (CMPI), have been a consistent drag on CMSB’s financial performance. Despite a 48% increase in group profit before tax to RM190.1 million for the financial year ended Dec 31, 2024 (FY2024), the phosphate division posted a loss before tax (LBT) of RM96.8 million. While this marks an improvement from FY2023’s LBT of RM156.7 million, concerns remain over the division’s long-term viability.
Adding to the confusion is CMPI’s Q4 FY2024 financials, which showed an operating profit of RM28.6 million despite the division generating no revenue in that quarter. Minority shareholders are calling for clarity and transparency on how this figure was derived, citing the need for more detailed disclosures. “The phosphate division had zero revenue for the quarter, yet reported a profit. Stakeholders deserve a full explanation,” a shareholder said.
Originally announced in 2014 with an estimated capital expenditure of RM1.04 billion, CMSB’s integrated phosphate complex in Samalaju Industrial Park, Bintulu, was slated for completion in 2018. Construction was only finalised in late 2022, and commercial production has yet to commence. The group now expects to begin commissioning in the final quarter of 2025, according to its recent Bursa Malaysia filing.
Compounding the issue is an ongoing dispute with Syarikat Sesco Bhd (Sesco) over the project’s power supply. In 2019, CMPI entered into a Power Purchase Agreement (PPA) with the state utility, which later became the subject of legal proceedings. As of December 2022, Sesco claimed RM266 million for electricity consumption and security shortfall charges. The matter escalated in 2023, when Sesco terminated power supply to the phosphate plant after the Court of Appeal dismissed CMPI’s request for a preservation order.
The dispute has since evolved into a RM342.25 million counterclaim by Sesco. With no electricity for nearly 20 months, stakeholders now question the feasibility of CMSB’s plan to begin commissioning by Q4 2025. Arbitration hearings have been rescheduled to May 2025.
Mounting Financial Strain
According to CMPI’s most recent financial statement (FY2023), the subsidiary has net current liabilities of RM275 million, raising concerns over potential technical insolvency. This has sparked debate among shareholders about whether CMSB should continue to inject capital into the project or consider cutting its losses.
Meanwhile, corporate governance concerns persist. The group has yet to appoint a new head of internal audit following the departure of Asril Rahman Abdul Hadi in October 2022—an important position that has remained vacant for more than two years. Shareholders argue that this raises questions about CMSB’s internal controls and risk oversight practices. “Leaving the internal audit function in acting hands for such a prolonged period sends the wrong message about the company’s commitment to transparency and accountability,” one shareholder remarked.
Mahmud Abu Bekir Taib – CMSB Deputy Chairman
Adding fuel to the fire, CMSB Deputy Chairman Mahmud Abu Bekir Taib filed a lawsuit on March 6 seeking access to the group’s financial records, including those of CMPI and four other subsidiaries. Abu Bekir, who holds a 0.5% stake in the company, is demanding a detailed inspection of the books—a move that underscores mounting tensions within the board.
The day after the lawsuit was filed, CMSB’s stock dropped as much as 8.17% to 95.5 sen—its lowest level in nearly a year—before closing at 99 sen, giving the group a market value of RM1.05 billion. Year to date, the stock is down 16%.
With its Annual General Meeting (AGM) slated for May 23, CMSB’s board can expect pointed questions from shareholders about the future of the phosphate project, the company’s financial exposure, and the strength of its corporate governance. For now, the road to recovery remains uncertain—clouded by operational setbacks, unresolved disputes, and investor unease.
