KOTA KINABALU: The Sabah government has announced a temporary ban on exports of scrap iron in a bid to meet the local steel industry’s needs for sufficient raw material to maintain operations.
Chief Minister Datuk Seri Hajiji Noor said the state Cabinet made the decision following an acute shortage of raw materials for billet and rebar productions in Sabah.
In a statement on Friday (June 11), he said the restriction would be lifted once the mechanism for the State Sales Tax imposition on scrap iron exports at RM200 per tonne has been properly formulated.
He added it is critical for part of the ferrous metals and scrap iron to be kept in Sabah in the long run to be value-added due to its scarcity and the fact that there are no iron mines in the state.
"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, ” said Hajiji.
He however added that exports of scrap metals like copper, aluminium and precious metals such as platinum, gold, titanium and stainless steel are exempted from the ban.
“With more raw material readily available, we hope to see bigger production of billets and rebars. This will stabilise the price of rebars, which is making the cost of construction in Sabah very high at the moment, ” added Hajiji.
He said that the steel industry here contributed significantly to the state's economy, providing around 500 jobs at present with an average monthly wage of RM2, 000 per worker.
"Therefore if our steel industry ceases operations, the state's unemployment rate will rise and this will create a very negative impact on our economy - more so during the Covid-19 pandemic," he said.
Hajiji said that the introduction of the ban and ensuring a sufficient supply of raw materials is anticipated to stimulate investment expansion, which will translate to 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 their operations into the production of wire rods, which would require a total investment of about RM40mil, ”
He added that local billet mill operators are planning to invest by building one more mill in the east coast of Sabah, which is expected to cost around RM20mil.
"The RM60mil combined investment activities will provide additional job opportunities for about 400 people in Sabah," Hajiji added.