Kota Kinabalu (Dec 8) - Sabah is poised to play a central role in Southeast Asia’s green industrial transition following an equity investment by OCBC’s Mezzanine Capital unit into a major low-carbon steel project located in the state.
Announced in Singapore on December 8, the investment supports the development of a Hot Briquetted Iron (HBI) plant in Sabah, forming part of Southeast Asia’s largest integrated low-carbon steel facility. The project, valued at approximately US$1.5 billion, is expected to commence commissioning by 2030 and will have an annual production capacity of 2.5 million tonnes of HBI, sufficient to produce a similar volume of low-carbon steel.
The investment was made into Green Esteel Pte Ltd (Esteel), a Singapore-based company specialising in low-carbon steel production and prefabrication. It marks Esteel’s first commercial funding from a financial institution in Asia, extended under OCBC’s Sustainability Investment Programme, which focuses on green and transition assets with high growth potential.
For Sabah, the project represents a significant industrial milestone. Steel is a critical material for construction, infrastructure and transportation, and is increasingly essential for net-zero technologies such as wind turbines, solar panels and carbon capture systems. The establishment of a large-scale low-carbon steel operation positions Sabah as a strategic hub for sustainable industrial development in the region.
The investment comes amid growing global urgency to decarbonise the steel sector. Traditional steelmaking, which relies heavily on coal, accounts for about 7% of global greenhouse gas emissions, making it the world’s highest-emitting manufacturing sector. In contrast, low-carbon steel technologies can potentially reduce carbon emissions by up to 80%. Market research indicates that global demand for low-carbon steel is accelerating rapidly, with the market projected to grow at a compound annual growth rate of 21.4%, reaching US$19.4 billion by 2029.
OCBC said the investment aligns with its broader commitment to decarbonisation, particularly in the steel sector, which is one of six industries where the bank has set net-zero greenhouse gas emission targets. Earlier this year, OCBC also became the first financial institution to join the Asia Pacific low-carbon steel initiative by the Urban Land Institute, aimed at accelerating adoption of low-carbon steel in construction.
Head of Global Investment Banking at OCBC, Mr Gan Kok Kim, said the Sabah-based project offers strong long-term growth potential amid rising global demand for greener steel solutions. He described the investment as a strategic milestone in strengthening the bank’s sustainable investment capabilities.
Meanwhile, Green Esteel CEO Ms Gong Hong said the partnership with OCBC would accelerate the company’s low-carbon transition strategy and help lay the foundation for a more resilient and sustainable steel industry.
With the scale of the project and its strategic location, the development is expected to enhance Sabah’s industrial profile while contributing meaningfully to regional and global decarbonisation efforts.