Hiap Teck in RM1.8b steel mill joint venture

Hiap Teck says future prospects are good due to strong steel demand in Malaysia as well as Indonesia, Thailand and as far as China, Japan, Korea, Europe and the United States.


HIAP Teck Venture Bhd expects its new RM1.8 billion steel mill in Terengganu to account for 50 per cent of its bottom line starting from 2014 on robust exports in Malaysia and Asean countries.

Hiap Teck executive deputy chairman Datuk David Law Tian Seng said future prospects are good due to strong steel demand locally as well as Indonesia, Thailand and as far as China, Japan, Korea, Europe and the United States.

The demand for steel in Asean alone is around four million tonnes a year.

Hiap Teck executive director Low Choong Sing said the integrated steel mill will start producing 700,000 tonnes a year by June 2012 (stage one), before being ramped up to 1.5 million tonnes (stage two) after one year.

About 60 per cent of the output will be for Malaysia, while the remaining 40 per cent for the Asean market.

"The mill will first run on one furnace and if demand is good, we may put in a second furnace under phase two.

"This can contribute to our bottomline as high as 70 per cent beyond 2015," Low told reporters here yesterday.

Hiap Teck has forged an alliance with China Shougang Group, and this was marked by a groundbreaking ceremony witnessed by Terengganu Menteri Besar Datuk Seri Ahmad Said yesterday.

Hiap Teck and Shougang formed a joint venture company called Eastern Steel Sdn Bhd, of which Hiap Teck owns 55 per cent, China Shougang 40 per cent and Chinaco Investment Pte Ltd owns the remaining five per cent.

The integrated steel mill will be based in the Kemaman Heavy Industrial Park, a project by the East Coast Economic Region (ECER).

The plant will cover 485ha site and employ 1,000 workers.

This is China Shougang's first investment in a steel mill outside China and the biggest Chinese foreign direct investment in Malaysia to date.

China Shougang is a leading steel producer in China with overseas investments in Hong Kong, Peru, South East Asia, Europe, Africa, North America and South America.

It is ranked at 325 in 2011 Global Fortune 500 with annual revenue of US$34.6 billion (RM108.4 billion) and produces 32 million tonnes of crude steel annually.

China Shougang chairman Zhu Jimin said it chose Malaysia due to its political and economic stability and its position as the third largest economy in South-East Asia.

It chose Hiap Teck as its partner because of the latter's listing status and good financial and track record in the steel industry.

The project has secured funding by HSBC Bank, Bank of China and the International Commerce Bank of China.

Established in 1987, Hiap Teck owns six factories and warehouses that sit on over 26.3 hectares.

It manufactures and distributes steel pipes, hollow sections, scaffolding equipment, accessories and other steel products.

With the new mill. Hiap Teck will be the country's largest steel pipes manufacturer and the country's top three producers of steel products.