OCBC’s mezzanine capital unit has made an equity investment in Singapore-based Green Esteel (Esteel), the controlling shareholder of SGX-listed BRC Asia, to develop a hot briquetted iron (HBI) plant under its sustainability investment programme.
The plant will form part of Southeast Asia’s largest integrated low-carbon steel plant and is scheduled for commissioning by 2030. HBI itself is a critical component in low-carbon steel production.
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.
See also: Powering Asia’s future: Singapore’s critical role in sustainable capital mobilisation
“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.
