Posted on 16 Jun 2016
Eastern Steel Sdn Bhd (ESSB), Hiap Teck Venture Bhd’s 55%-owned steel manufacturing joint venture with the Shougang Group of China, has attracted another major Chinese steel industry player, Ansteel Group Corp.
In a filing with Bursa Malaysia, Hiap Teck said ESSB, whose plant in Kemaman began trial production early last year, had signed a memorandum of understanding with Ansteel Group’s unit Angang Group Hong Kong Co Ltd (Angang-HK) on Wednesday to explore, discuss and negotiate areas of cooperation between them.
The discussion will include the resumption of production at ESSB, future expansion of ESSB’s production capacity and product range, and Angang-HK’s participation in the equity of ESSB.
“It was agreed that, for a period of 60 days from July 1 (exclusivity period), both parties shall negotiate in good faith with a view to enter into a formal agreement within the exclusivity period,” said the maker of steel products such as pipes and hollow sections.
According to Hiap Teck’s 2015 annual report, ESSB posted a loss of RM108.5mil for the financial year ended July 31, 2015.
In the chairman’s statement, it was noted that the group’s performance was affected by ESSB’s loss as a result of the strengthening of the US dollar.
Besides an unrealised foreign exchange loss of RM54.95mil, ESSB was hit by the higher cost associated with trial production at its plant that began in January last year. This and the depressed market prices of slabs led ESSB to suspend temporarily trial production in October.
Hiap Teck shares rose 2.5 sen to close at 31 sen on Wednesday, with 11.93 million shares changing hands.
