The project, which will be located in Sabah, is estimated to cost around US$1.5 billion ($1.94 billion). It is expected to have an annual production capacity of 2.5 million tonnes of HBI. The same amount can be used to produce about the same volume of low-carbon steel, a widely-used industrial material and is integral to the construction, infrastructure, and transportation industries.
According to OCBC, the investment is Esteel’s first commercial funding provided by a financial institution in Asia.
The investment is said to be timely as traditional steel production relies heavily on coal and accounting for about 7% of global greenhouse gas emissions. Per OCBC’s statement, released on Dec 8, low-carbon steel production technologies can potentially produce up to 80% lesser carbon emissions. The low-carbon steel market, according to this year’s Green Steel Industry Report by Research and Markets, is projected to grow at a compound annual growth rate (CAGR) of 21.4% from 2024 to reach US$19.4 billion by 2029.
“With demand for low-carbon steel expected to rise sharply around the world, we are confident that our equity investment in Esteel offers strong potential for long-term growth returns,” says Gan Kok Kim, OCBC’s head of global investment banking.
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“This partnership not only accelerates the implementation of our transition strategy, but also reinforces our shared commitment to sustainable industrial transformation,” adds Gong Hong, CEO of Green Esteel.
