KOTA KINABALU: Steel Industries (Sabah) Sdn Bhd welcomed the announcement made by the Chief Minister Datuk Seri Hajiji Haji Noor that the State Government has temporarily barred the export of scrap iron going out of Sabah.
Its Executive Director, Azrul Bin Ahmad, said for the steel mill, it is a volume game and thus to ensure enough supply of raw material is utmost important.
“Therefore, the price of the billets, which raw material is scrap iron, has been much affected by the price of scrap iron. It impacts on the production costs and is reflected in the steel bar selling price,” he said in a statement today.
The steel bar price in Sabah is very volatile due to the billets cost, said Azrul.
He said recently the steel bar price has been in the uptrend due to the rising cost of billets.
“With the State Government’s decision, we can expect not only a stable supply of billets but more so on its pricing.
“We are confident that this will have achieved the goal of ensuring sufficient raw material supply for the local steel and construction industry,” he said.
In a statement yesterday, the Chief Minister said Sabah has temporarily barred the exports of scrap iron to ensure sufficient raw material for the local steel industry to maintain its operations.
He said the ban would be lifted once the mechanism has been formulated for the imposition of the RM200 per metric tonne State Sales Tax on scrap iron exports.
Hajiji, however, said that exports of scrap metals like copper, aluminium, precious metals such as platinum, gold, titanium and stainless steel are exempted from the ban.
He said the State Cabinet made the decision since there was an acute shortage of raw materials for billet and rebar productions in Sabah.
Hajiji said that with more raw materials readily available, it would see bigger production of billets and rebars, in turn stabilising rebars price, which at the moment is so high making construction costs in Sabah costly.
“The steel industry contributes significantly to Sabah’s economy and it is currently providing 500 jobs with an average monthly wage of RM2,000 per worker.
“Therefore if our steel industry ceases operations, the state’s unemployment rate will rise and this will create a very negative impact on our economy more so during these times of Covid-19 pandemic,” he said.
According to him, a sufficient supply of raw material would stimulate investment expansion that would see an increase in production capacity from 8,000 tonnes to 18,000 tonnes per month.
It would also allow the existing billet mills to expand operations into wire rods production, which would require a total investment of about RM40 million, he said, adding local billet mill operators were also planning to reinvest by building one more mill in the East Coast that will cost an estimated RM20 million.
“These RM60 million additional investment activities will provide more job opportunities for about 400 people in Sabah,” he said.
Due to its scarcity and the fact that there is no steel mine in Sabah, he said it was critical that a part of the ferrous metals or scrap irons be kept in the state to be value-added.
“The temporary ban is also in line with Sabah’s industrial policy under the Halatuju Sabah Maju Jaya to stimulate high value-added downstream processing activities.
“More importantly, this will create more job opportunities for our people,” he said.