Misif, MSA oppose Wenan Steel Project in Sarawak

PETALING JAYA: The Malaysian Iron & Steel Industry Federation (Misif) and the Malaysia Steel Association (MSA) is opposing the proposed new investment from the Wenan Steel Project at Samalaju Industrial Park within the Sarawak Corridor of Renewable Energy (SCORE).

In a joint statement, the associations said if allowed to materialise, the local steel industry expects the proposed project with 10 million metric tonnes (MT) per annum will further exacerbate the overcapacity in the country.

“The presence of this mill has caused nearly half a billion ringgit in losses for the four key domestic long products steel mills in the last four quarters which otherwise would have been profit-making and contributed significantly to the government’s tax coffers,” it said.

Both Misif and MSA said that while they welcome foreign direct investment and domestic direct investment in steel grades and products which are not manufactured locally, manufacturing licenses for like products produced by existing local steel mills should not be approved.

The associations also pointed out that Malaysia’s total steel consumption in 2018 was 9.77 million MT but the total installed capacity was 24.64 million MT, with 12.64 million MT and 12 million MT for long and flat products respectively.

In terms of utilisation, national long products’ capacity utilisation deteriorated to about 28% in 2018, from nearly 46% in 2014 due to the emergence of another China-owned mill in the east coast of West Malaysia.

As for flat products, although hot rolled coil (HRC) production capacity is temporarily idle, if all the HRC demand is to be fulfilled, utilisation rate will be at a mere 28%.

“If new production capabilities are left unchecked, it could result in the retrenchment of 8,000 local employees from the existing mills throughout Malaysia which is against the public interest.

“This comes at a critical time when local steel millers are in the midst of working towards consolidation or reconfiguration to improve its competitiveness via reinvestment of hundreds of millions of ringgit in new technology and know-how transfer to develop highly skilled Malaysian specialists,” the statement said.

Meanwhile, domestic scrap supply was 2.96 million MT in 2018 with the shortfall of 558,000 MT met by imports.

Misif and MSA said if Wenan were to produce 10 million MT of steel products with a conventional scrap consumption of 20%, it would require up to 2 million MT of scrap metal.

“Scrap demand of existing steel millers can only be met via imports and this will lead to foreign exchange loss, trade deficit and outflow due to service costs, freight and insurance charges,” it added.

The associations concluded their statement by reiterating that they welcomed the opportunity to engage with all stakeholders to chart positive paths to upgrade and develop the local steel industry with new technologies and manufacturing of new and high value added products.

source https://www.thesundaily.my/business/misif-msa-oppose-wenan-steel-project-in-sarawak-II1965497