Malaysia, China discussing G2G mechanism to support steel industry
24 Oct 2024
Malaysia is working with China to establish a government-to-government (G2G) mechanism for capacity management and technology sharing within the steel industry.
Deputy Investment, Trade and Industry Minister Liew Chin Tong said the government is also advocating for discussions on the steel industry’s challenges and potential collaboration with China at the Asean level.
“For the iron and steel industry, this means addressing the imbalance between local long product capacity and imported flat product volume. With investments directed towards building up the local capacity in both manufacturing and utilisation of flat products, we hope to see an improvement in this imbalance and increase the economic sustainability of the industry.
“However, we need to be cautious of the emissions that follow – if all the approved steel capacity comes online, the emissions would be equivalent to having six coal-fired power plants, challenging our commitment to achieve net-zero emissions by 2050,“ he said in his speech at the 14th conference of the Malaysian Iron and Steel Industry Federation here today.
Liew said mechanisms need to be put in place to facilitate the iron and steel industry’s green transition.
“This brings us to the introduction of a carbon tax to the industry, which Prime Minister Datuk Seri Anwar Ibrahim announced in his Budget 2025 speech. Once implemented, among others, the carbon tax collected can be utilised to fund the green transition of the iron and steel industry.”
Touching on the global landscape, Liew said the construction steel consumption, especially in China, is on a downward trend. However, the production capacity built over the years remains, resulting in an excess production volume and the subsequent unloading, flooding, and even dumping of steel products in the global market.
The Southeast Asian steel industry is not spared from these challenges, Liew said.
“Not too long ago, the Malaysian discourse was all about worries concerning the European Union’s carbon border adjustment mechanism (CBAM). Very soon, once Malaysia implements our carbon tax, we will need a CBAM of our own to level the playing field and to ensure foreign steel pays Malaysian carbon tax,“ he added.
Touching on improving the governance structure of the iron and steel industry, Liew said various bodies, such as the Malaysian Steel Council and the Malaysian Steel Institute (MSI), must improve to ensure they meet more regularly and receive more robust input from the industry.
“Similarly, the MSI requires a total revamp of its roles to be a credible source of robust policy input,“ Liew said.
He said the government’s ambition is to ensure that the steel industry remains profitable and environmentally resilient.
“We are optimistic that the industry will thrive, driven not only by infrastructure projects but also by the wave of new investments – a second takeoff – with more advanced manufacturing, including aerospace. We believe this second takeoff will benefit everyone, including the iron and steel industry,“ Liew said.
Source: The Sun
