Japan-based steelmaker Nippon Steel Corp. and Japanese trading company Hanwa Co will towards the end of December this year acquire ten and 15 percent respectively of the voting shares in Malaysian manufacturer of electro-galvanized (EG) steel sheets, E-Galv Steel Industries (E-Galv Steel), from its largest shareholder, Tatt Giap Steel Centre, a subsidiary of Tatt Giap Group.
"By investing in E-Galv Steel, Nippon Steel and Hanwa aim to strengthen their relationships and expand its business with Tatt Giap Group," reads Nippon Steel's statement.
Accordingly, Nippon Steel and Hanwa intend to build a supply structure for EG steel sheets capable of satisfying the quality requirements of Malaysian customers including Japanese home appliance manufacturers in Malaysia, and to securely capture demand for steel, mainly for home appliances, in Malaysia, by stable supply of cold rolled steel substrates to E-Galv Steel and through possible technical assistance to E-Galv Steel, as necessary.
After Nippon Steel and Hanwa complete their investment in E-Galv Steel, the company is planning to change its current name to Nippon EGalv Steel Sdn. Bhd.
E-Galv Steel has an annual capacity of up to 120,000 mt of EG steel sheets, i.e., about two-thirds of the annual consumption of this product in the country, and plans to expand its capacity to 180,000 mt in the next six months, which will require an investment of about MYR 15 million (about $4.4 million).
"The expansion of Nippon EGalv's output would reduce the country's dependence on imported of EG steel sheets, saving us on foreign exchange losses," Malaysian Iron and Steel Industry Federation president Chow Chong Long stated.
Malaysia is regarded as a large consumption area of EG steel sheets, with the demand expected to grow by about 50 percent next year.
Nippon Steel and Hanwa have been in discussion with Tatt Giap Group, on possible investment in and stable supplies of cold rolled steel substrates to E-Galv Steel since July 2009.