RM750m investment in Stage 1 of Phase 1, RM1.05b in Stage 2 of Phase 1

Kemaman, 5 December, 2011 – Eastern Steel today commenced the construction on the first phase of its integrated steel mill worth RM1.8 billion in the East Coast Economic Region’s (ECER) Kemaman Heavy Industrial Park (KHIP).

When Stage 1 of Phase 1 costing RM750 million is completed by mid-2013, the mill will have the capacity to produce 700,000 metric tons (MT) of steel products annually. Stage 2 will involve an additional RM1.05 billion and will increase the annual production capacity of the mill to 1.5 million MT.

Eastern Steel was formed under a cooperation agreement between Malaysia’s Hiap Teck Venture Berhad (HTVB) and China Shougang Group. HTVB has a 55 per cent stake in Eastern Steel while China Shougang Group controls 40 per cent.

China Shougang Group is one of China’s leading steel companies with an annual crude steel output of above 30 million MT.

It ranked no. 326 in the 2011 Fortune Global 500 with total annual revenue of USD29 billion. It has four subsidiaries listed on the Hong Kong Stock Exchange, including an iron ore mining company in South America.

Meanwhile, HTVB is a leading Malaysian steel company which was founded in 1987. It has six factories and warehouses over 65 acres, which are in manufacturing and distributing steel pipes, hollow sections, scaffolding equipment, accessories and other steel products.

“Eastern Steel’s investment in an integrated steel mill is a strategic and catalytic project for Terengganu. At the very least, it can lessen the dependence on the development of other sectors which are synonymous with the State,” said Terengganu Menteri Besar YAB Dato’ Seri Haji Ahmad bin Said.

He said Terengganu was proud to welcome Eastern Steel which marked the first heavy industry investment by a Chinese company in Terengganu and the biggest investment in Kemaman to date.

“While creating over 2,000 new jobs in Terengganu, this steel mill will develop small and medium-sized enterprise (SME) clusters to support the heavy industry in the area.

“Terengganu residents can also expect to benefit from the transfer of technical expertise and get a leg up into the growing steel industry,” Dato’ Seri Ahmad pointed out.

Speaking on behalf of China Shougang, Chairman Mr. Zhu Jimin said: “We see tremendous potential in the steel mill industry in Malaysia and we are very excited as this is Shougang’s first steel mill investment outside of China.

“We also have a reputable partner who possesses tremendous strength, who brought us to Malaysia. Our local partner, Hiap Teck Venture Berhad, is a leading steel company in Malaysia and also a top five metal products distributor with the extensive distribution network.

“Malaysia is poised to tap into the market with its good business climate and its strategic location between East and South Asia and in the centre of the Asia Pacific region,” he said.

Tan Sri Dato’ Alwi bin Jantan, Executive Chairman of Eastern Steel Sdn Bhd noted: “I am confident that the construction of the Integrated Steel Mill will bring many social and economic benefits to the people in the Kemaman area and consequently the people of Terengganu.

He said Eastern Steel had commenced discussions with TATI University College to provide opportunities to the local residents and to enable them to take part in the steel industry.

Meanwhile, Dato’ Jebasingam Issace John, Chief Executive Officer of East Coast Economic Region Development Council (ECERDC) explained that infrastructure works have begun to facilitate Eastern Steel’s operations in the Kemaman Heavy Industrial Park.

“The nearby Kemaman Port is now being upgraded. It will have comprehensive port facilities, a free zone and can accommodate bigger and more vessels.

“Roads are being widened and the Bukit Kuang Bridge will be enhanced. At the same time, flood mitigation projects are in place to prevent flooding,” he said.

Dato’ Issace added that KHIP was an entry point project under the country’s Economic Transformation Programme (ETP) initiated by the Prime Minister Dato’ Sri Mohd Najib bin Tun Abdul Razak.

The demand for steel increased in all ASEAN countries in 2010. Malaysia continued to take the lead in the production of crude steel, dominating with 29 per cent of regional production.

With the full implementation of the Asean Free Trade Area (AFTA), in which ASEAN will become a duty free area for manufactured goods, ASEAN trade is expected to increase further.