PETALING JAYA: Steel production will become more environmentally friendly with the setting up of a new US$4.39 billion (RM19.6 billion) production facility in Sabah soon.
Under the appropriately named “green steel project”, the plant will replace coke and coal with natural gas, and subsequently hydrogen in the future, as a reducing agent.
The switch will see carbon emission drop by 70% initially and eventually by nearly 100%, according to Sabah Oil & Gas Development Corporation Sdn Bhd (SOGDC).
The company has entered into a land lease agreement with Esteel Enterprise Sabah Sdn Bhd (Esteel) for the project at the Sabah oil and gas industrial park in Sipitang. The agreement was signed in Kota Kinabalu today.
The green steel project was initiated by Esteel to reduce the carbon footprint of steel production.
The project covers the entire production chain from iron ore concentration, palletising and direct reduced iron (DRI) to steelmaking, steel rolling and high-end steel processing.
The use of natural gas will ensure that carbon emission from the production of steel drops by 70% but the facility will eventually turn to green hydrogen smelting, which leads to near zero carbon emission.
Steel production currently accounts for about 8% of the world’s total carbon emission, making it the biggest contributor of the pollutant.
Under the agreement with SOGDC, Esteel will construct an integrated green steel plant on a 180ha site in the industrial park.
Investment in the three-phase project is expected to top US$4.39 billion (RM19.6 billion).
Under the first phase are multiple facilities such as an iron concentration plant, pelletising plant, hot briquetted iron (HBI) plant, as well as jetty and support facilities. This plant will eventually produce 2.5mtpy (million tonnes per year) of HBI.
Work on this phase will begin in the third quarter of next year (Q3 2023) and is expected to be completed by the last quarter of 2025 at a cost of US$1.29 billion (RM5.77 billion).
The project is expected to generate huge economic spin-offs. There will be 10,000 to 15,000 new jobs available for the local community during the construction period.
A total of 1,752 jobs will be available during the operation period of the first phase, together with another 8,000 indirect job opportunities.
Under the second and third phases, there will be 5,455 new jobs together with another 30,000 indirect job opportunities.