MIDA e-News

Spanish stainless steel producer, Acerinox, will continue with its investment in Bahru Stainless Sdn Bhd despite the financial crisis affecting the eurozone country.

Bahru Stainless is a subsidiary of stainless steel giant, Acerinox Group from Spain, which has a 67% stake, while Japan's Nisshin Steel and Metail One owns 30% and 3% respectively.

Bahru Stainless is Acerinox's fourth largest investment. It has four plants located in four continents.

Bahru Stainless Chief Executive Officer, Lucien Matthews said that the investment in the steel plant in Iskandar Malaysia, Johor is a “strategic investment that we are committed to” despite the Spanish financial woes at home.

“The financial crisis started in 2008. From the Acerinox press releases over the past four years, you will see that they have made it clear the project continues,” said Matthews.

The project started in 2008, the same year the financial crisis affected world economy.

Matthews said the Spanish company has committed more than RM2 billion for its first two phases.

The first phase, which was announced late 2011, commenced early 2012, involves the installation of several lines and the setting up of a cold rolling mill and packing stations.

Work on the second phase is expected to start in the second quarter of 2013.

The plant's annual production capacity for phase one will be about 240,000 tonnes, and is expected to increase by more than 60% to 400,000 tonnes once phase two is completed.

The third and fourth phases are expected to continue until 2020. Work on phases three and four will involve the installation of a hot rolling mill and melting facilities.

Matthews said it was very likely that total investment would exceed RM5 billion for the completion of all the four phases.

On what sort of returns are expected, Matthews said returns would depend on market conditions.

It may change on a short-term basis based on raw material prices and the world market situation.

“We will not try to forecast (what the returns will be) due to the variability of raw material cost,” he said.

Matthews said the price of nickel would be an important component and might “fluctuate substantially”.

Spanish Embassy commercial councillor Luis Lopez said other Spanish interests in Malaysia include sanitaryware maker Roca Corporacion who also came four years ago and Dunlopillo Holdings Sdn Bhd.

Spanish rest-related product group Pikolin acquired 100% of the mattress company from Malaysian group Sime Darby late last year, while Roca purchased Johnson Suisse several years ago.

Adapted from StarBiz, 4 June 2012