Kota Kinabalu: Sabah Oil & Gas Development Corporation Sdn Bhd (SOGDC) and Esteel Enterprise Sabah Sdn Bhd (Esteel Sabah) signed a land-lease agreement for a USD4.39 billion (RM19.65 billion) Green Steel Project at Sabah Oil & Gas Industrial Park (Sogip) in Sipitang – the single biggest investment received by Sabah thus far.
Chief Minister Datuk Seri Hajiji Noor witnessed the signing ceremony, Wednesday, at the Mini Auditorium, Level 3, Sabah State Legislative Assembly here.
Representing SOGDC were SOGDC Chairman Datuk Seri Abdul Rahman Dahlan and its Managing Director/CEO while Esteel Sabah by Managing Director Xu Yihang and Director Eng Shao Wei.
Also present were State Secretary Datuk Seri Sr Safar Untong, Assistant Industrial Development Minister Mohd Tamin Zainal, its Permanent Secretary Datuk Thomas Logijin, Esteel Enterprise PTY Ltd Senior Advisor Datuk Seri Wee Yiaw Hin, Sipitang Member of Parliament Datuk Matbali Musah and Sindumin Assemblyman Datuk Dr Yusof Yacob.
Realising the importance of reducing the carbon footprint on the environment, Green Steel Project was initiated by Esteel to develop the whole green steel industry chain which includes iron ore concentration, palletising, Direct Reduced Iron (DRI), steelmaking, steel rolling and high-end steel processing.
The plant uses natural gas as a reducing agent instead of coke and coal, which reduces carbon emission by 70 per cent and is low carbon, efficient and environmentally friendly.
In the future, it will gradually transform into green hydrogen smelting with near-zero carbon emissions. (The steel industry is the world’s largest carbon emitter, accounting for about 8 per cent of the world’s total emissions).
Esteel Sabah is seeking to construct an integrated green steel industry occupying 446 acres for Phase I of the project in Sogip, an industrial area for downstream oil and gas in Sipitang.
It is a three-phase project with a total projected investment value of USD4.39 billion.
Phase I would produce 2.5mtpy hot briquetted iron (HBI) consisting of multiple facilities such as an iron ore concentration plant, pelletizing plant, HBI plant, jetty, support facilities, etc.
It would commence in Q4 of 2023 and is expected to be completed by Q4 of 2025 with an investment value of 1.29 billion USD.
Upon completion Of Phase I, Phase II and III will have another two sets of DRI, 2.5mtpy each and will include steelmaking, steel rolling, high-end steel processing and waste recycling, etc.
The project is expected to generate a huge economic spin-off through the creation of 10,000–15,000 jobs during the construction period and 1,752 during the operation period for Phase I alone boosting another 8,000 in-direct job opportunities.
While Phase II and III will create 5,455 job opportunities during the operation period, boosting 30,000 in-direct job opportunities.
Established in August 2010, SOGDC is a government agency under the Industrial Development Ministry that acts as a purpose vehicle company to own, develop, manage and market Sogip, an area of approximately 1,600ha/4,065 acres in Mengalong, Sipitang.
Abdul Rahman said the Chief Minister as well as State ministries and agencies concerned have given their respective commitments to ensure all the requirements of this company can be successfully fulfilled.
“God willing, Sogip will become a new benchmark in the development of industry in Sabah and will become the first choice destination for investors in this region.
“The spin-off from this investment will give a huge positive impact in Sipitang, to make the district another industrial centre in our country and as a catalyst for development in Sabah,” he said, adding that Sogip is expecting a few more investments within one to two years from now.
Asked where the raw materials for making the green steel products would come from, Abdul Rahman said as far as he know, the company has been in the business for quite some time, and in fact, they had just built one of the biggest steel plants in China which has production capacity of 12 million metric tonnes a year. “Therefore we expect them to secure their supply from all over the world.
“That doesn’t matter. They will bring it into Sipitang and process it to become the final product for export. So that is what we intend to do anyway. So there would be no more problem in terms of supply of raw materials,” he said.
“We certainly hope that with such a large production later it can also help us deal with the increasing cost of construction materials like steel products in the country and Sabah, as well as internationally,” he said.
He said most important is the great number of employment opportunities created and this would place Sabah as one of the states having a great and strong industrial foundation, in line with the aspirations of the Hala Tuju Sabah Maju Jaya (SMJ).
Meanwhile, Harun said the project would include developing a dry-bulk jetty, where the jetty head will be built on sea at the depth of over 20 metres.
The same group had also bought a plant in Labuan where more or less 100 per cent of their workers are from Sabah.
“So for this green steel project, we
will set for the company to have at least 80 per cent of its workers are Sabahans,” he said.
Dr Yusof welcomed the project and hoped local contractors would also be able to take part in its development.
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