It is reported that steel giant China Shougang Group which holds a 40% stake in Eastern Steel Sdn Bhd has finalised a USD 150 million loan facility to finance phase one of a steel mill project at Kemaman in Terengganu.

Chairman Mr Zhu Ji Min said the facility will be arranged by a consortium of major banks comprising Hong Kong and Shanghai Banking Corporation, Bank of China and Industrial and Commercial Bank of China.

He said the overall situation of the steel industry will be better in the next few years with demand for steel expected to grow on the back of steady demand from China and Asean countries.

He added that steel prices currently fluctuate sharply and frequently, mainly due to developments in the world economy and slow demand from Europe and the United States. He also said "In the next few years, I am sure the world economy will recover and push steel prices higher."

Eastern Steel, a joint venture between Shougang and Hiap Teck Venture Bhd, plans to complete the project phase one which will cost about MYR 754 million, by mid-2013. The plant will have an annual steel production capacity of 700,000 tonnes.

Mr Low Choong Sing Hiap Teck executive director said the company has also arranged its own funding by way of private placement, rights issue and convertible bonds.

He said that "The current economic situation offers the best opportunity to implement the project with much lower raw material costs and fast delivery of equipment ordered."

He also said the second part of the project, involving an investment of about MYR 1 billion would double the mill's annual capacity to 1.5 million tonnes.

Total investment in the project, located at the Kemaman Heavy Industrial Park in the East Coast Economic Region is MYR 1.8 billion.

(Sourced from www.thesundaily.my)