KOTA KINABALU: Sabah has barred the exports of scrap iron temporarily to ensure sufficient raw material for the local steel industry to maintain its operations.
Chief Minister Datuk Seri Hajiji Haji Noor said the ban would be lifted once the mechanism has been formulated for the imposition of the RM200 per metric tonne State Sales Tax on scrap iron exports.
However, exports of scrap metals like copper, aluminium, precious metals such as platinum, gold, titanium and stainless steel are exempted from the ban.
In a statement here, he said the State Cabinet made the decision since there was an acute shortage of raw materials for billet and rebar productions in Sabah.
Hajiji said that with more raw materials readily available, it would see bigger production of billets and rebars, in turn stabilising rebars price, which at the moment is so high making construction costs in Sabah costly.
“The steel industry contributes significantly to Sabah’s economy and it is currently providing 500 jobs with an average monthly wage of RM2,000 per worker.
“Therefore if our steel industry cease operations, the state’s unemployment rate will rise and this will create a very negative impact on our economy more so during these times of Covid-19 pandemic,” he said.
According to him, a sufficient supply of raw material would stimulate investment expansion, that would see an increase in production capacity from 8,000 tonnes to 18,000 tonnes per month.
It would also allow the existing billet mills to expand operations into wire rods production, which would require a total investment of about RM40 million.
Local billet mill operators were also planning to reinvest by building one more mill in the East Coast that will cost an estimated RM20 million.
“These RM60 million additional investment activities will provide more job opportunities for about 400 people in Sabah,” he said.
Due to its scarcity and the fact that there is no steel mine in Sabah, he said it was critical that a part of the ferrous metals or scrap irons be kept in the state to be value-added.
“The temporary ban is also in line with Sabah’s industrial policy under the Halatuju Sabah Maju Jaya to stimulate high value-added downstream processing activities.
“More importantly, this will create more job opportunities for our people,” he said.