OCBC takes equity stake in Esteel’s $1.9b hot briquetted iron plant plan

The US$1.5b development will have the capacity to produce about 2.5 million tonnes of hot briquetted iron a year.

OCBC has made an equity investment in Green Esteel Pte Ltd to support the development of a hot briquetted iron (HBI) plant in Sabah, which will anchor what is expected to be Southeast Asia’s largest integrated low-carbon steel facility.

The investment was made through OCBC’s Mezzanine Capital unit and marks Esteel’s first commercial funding from a financial institution in Asia.

The project is targeting commissioning in 2030.

The $1.9b (US$1.5b) development will have the capacity to produce about 2.5 million tonnes of hot briquetted iron a year, providing feedstock for roughly the same volume of low-carbon steel.

HBI is a key input for lower-emission steelmaking routes that can cut greenhouse gas emissions by up to 80% compared with traditional coal-based processes. The steel sector accounts for around 7% of global emissions.

OCBC group head of investment banking Gan Kok Kim said the bank expects strong long-term returns from the project and described the transaction as a strategic milestone in building its sustainable investment capabilities.

Esteel chief executive Gong Hong said the equity backing will help accelerate the company’s transition strategy and its efforts to advance a greener steel industry.

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