Malaysian steel mills Ann Joo, Southern Steel end joint venture plan

Singapore — Malaysian steel mills Ann Joo and Southern Steel Said Wednesday that their proposal to form a longs-product steel joint venture has fallen through.

The news came seven-and-a-half months after the signing of the venture's memorandum of understanding between both companies, on October 7, and will be terminated with immediate effect.

Its termination was attributed to the current uncertain market brought about by the coronavirus pandemic. Which the pandemic has also brought the country to a 12 week partial shutdown since March 18, and slated to expire June 9.

The termination comes as a blow to Malaysia's move toward consolidation of the steel industry since 2016, in a bid to help stem losses from the overcapacity issues of mills producing similar "like-products".

The venture was previously proposed for Ann Joo to hold a 55% stake in the proposed JV company, while Southern Steel will uptake the remaining 45% interest.

Ann Joo currently operates a 450 cu m blast furnace integrated with and a 100 mt electric-arc-furnace, with billet production capacity of 820,000 mt, while Southern Steel has two EAF of 78 mt and 87 mt sizes, with total billet production capacity of 1.4 million mt.