Economic


*The content on this webpage is sourced from Southern Steel Berhad's Annual Report 2025


Life Cycle Analysis

Life Cycle Analysis (LCA) is a systematic methodology for assessing the environmental impact of a product, process, or service throughout its entire life cycle. LCA enables the Group to understand and manage the environmental consequences of its operational activities, aligning with the Group’s Sustainability Policy Statement and stakeholder expectations.

The Group is committed to minimising the environmental impact of its steel products throughout their entire life cycle—from raw material extraction to end-of-life recycling. Life cycle considerations are integrated into product and system design to ensure sustainability at every stage. Through life cycle analysis, the Group evaluates how its products are manufactured, distributed, used, and recycled, enabling effective management of environmental impacts and supporting long-term sustainable development.





Supply Chain Management

Description
The Group views effective supply chain management as essential for staying agile amid Malaysia’s changing economic conditions. We aim to ensure a stable, cost-efficient supply of materials and services while delivering quality products on time to meet the customers’ expectation and products’ specifications.

Our Business Model and Value Chain
The Group operates a range of efficient steel manufacturing facilities, encompassing both upstream and downstream activities across multiple locations. Our value chain begins with strategic sourcing of raw materials, including steel scrap, steel billets, wire rods and steel coils from local and international market, followed by in-house production that prioritises on operation efficiency, resource optimisation and continuous improvement to meet customers’ requirements.

Our finished products include wire rods, reinforcement bars (rebar), steel wire mesh, customised cut and bend steel bars, steel pipes, prestressed concrete strand and prestressed concrete wire. These are distributed through customer-focused logistics designed to deliver value through reliability, cost effectiveness, and consistent product performance. To further enhance customer satisfaction, we provide technical support services after sales.

Our business model is built on operational excellence, reliable product quality, and effective sourcing management. These pillars support our commitment to long-term value creation for stakeholders and contribute to our broader sustainability objectives.

Strategy and Decision Making
The Group recognises that ESG factors are essential for sustaining long-term business resilience and strengthening stakeholder trust. In line with this commitment, sustainability principles have been embedded across key stages of our supply chain.

This includes the establishment of a Supplier Code of Conduct and Ethics, which outline our expectations on responsible business practices, and the implementation of a structured ESG assessments within the supplier management. These measures enable our suppliers to uphold standards that are consistent with the Group’s sustainability values, fostering ethical conduct, environmental responsibility, and social accountability throughout the supply network.

Supplier Code of Conduct and Ethics

Our suppliers continue to play a vital role in driving the Group’s sustainability values. We actively engage our suppliers to uphold the expectations outlined in our Supplier Code of Conduct and Ethics. We have reviewed and updated our Supplier Code of Conduct and Ethics to include the prohibition of child labour under our expectation on Labour and Human Rights. This enhancement reflects our ongoing dedication to advancing responsible sourcing and the promotion of sustainable and ethical practices throughout our supply chain.



Supplier Code of Conduct and Ethics
To ensure the suitability and reliability of suppliers within our supply chain, all prospective vendors are required to undergo due diligence process before supplying any materials or services to the Group. This exercise serves to verify the authenticity, capability, and compliance of suppliers with the Group’s standards and requirements.

The Group also conducts an annual assessment of supplier performance based on key evaluation criteria, including:
• Product Application, Quality, and Technical Support
• Delivery Performance
• Service Standards
• Packaging and Labelling

Following the evaluation, suppliers are rated as Good, Satisfactory, or Poor. Suppliers rated “Poor” are formally notified of their areas of weakness and are required to take corrective actions to improve their performance.

In line with our commitment to ESG principles, the Group continued its Vendor ESG Assessment in FY2025. This initiative encourages suppliers to evaluate and enhance their practices in areas such as environmental stewardship, social responsibility, economic impact, and governance. It also enables the Group to gauge suppliers’ level of ESG awareness and engagement, supporting the development of a more responsible and resilient supply chain.

Supporting Local Procurement
The Group continues to recognise the value of local procurement and seeks opportunities to engage with domestic suppliers where feasible. While supply availability and cost competitiveness remain important considerations, strengthening collaboration with local vendors is an ongoing focus within our broader supply chain strategy.

Financial Effect
The Group assesses the financial implications of supply chain management in relation to sustainability-related risks and opportunities and climate-related risks and opportunities. The Group is exposed to several SRO and CRO factors that may result in increased operational and compliance costs, including:

• Supply chain disruptions due to supplier non-compliance with ESG related regulations, geopolitical tensions, raw material scarcity, declining supplier quality, or the increasing severity and frequency of extreme weather events such as floods.
• Introduction of carbon pricing mechanisms, which may affect procurement and production costs.
• Rising energy costs driven by carbon taxes impacting electricity tariffs.

As the Group’s business model relies heavily on the procurement of raw materials from both local and international markets, it is particularly vulnerable to these risks. Furthermore, as a company operating within a hard-to-abate industry, which is among the sectors expected to be subjected to carbon tax mechanisms. In this context, the Group anticipates that both current and anticipated financial impact is significant.

Resilience of the Group's Strategy and Business Model
The Group’s strategy and business model are designed to remain resilient by continuously assessing and adapting supply chain management practices to address identified CRO and SRO. This approach supports long-term viability and competitiveness while managing ESG risks. Our supply chain strategy incorporates proactive measures to meet stakeholder expectations for ethical sourcing, and compliance with environmental and regulatory requirements. The Group has also diversified its supplier base to reduce dependency on high-risk sources and strengthen ESG engagement with suppliers.

In addition, we regularly review supply chain performance and metrics to identify areas for improvement. These efforts enable the Group to remain agile and responsive to emerging risks and opportunities, reinforcing the resilience of our business model in a dynamic operating environment

Metrics and Targets
The Group monitors and reports key sustainability metrics across its supply chain to evaluate performance, track progress, and guide strategic decisions. We assess and disclose the following supply chain-related sustainability indicators:

• Vendor ESG Assessment
Response rate of suppliers assessed and verified for ESG awareness and understanding.

• Procurement Spending Ratio
Proportion of procurement spend on local and overseas

Vendor ESG Assessment
The Group extended invitations to both existing and new suppliers to participate in the ESG Assessment. Of the 157 existing suppliers invited, 157 responded, resulting in an impressive 100% response rate. All 188 new suppliers responded, achieving a 100% response rate. The summary of assessment participation is as follows:


Findings from the Vendor’s ESG Assessment indicate significant opportunities for improvement across all key sustainability dimensions. Both existing and new suppliers exhibit limited awareness in key areas such as environmental responsibility, social impact, and economic practices. However, existing suppliers demonstrate a strong understanding of governance standards, while new suppliers show a moderate level of comprehension. The summarised assessment results are as follows:



Procurement Spending Ratio
The Group’s spending on local suppliers and overseas suppliers is listed as below:


Product and Quality

Description
The Group upholds responsible industrial practices as part of its ongoing commitment to sustainability. With a core focus on manufacturing a diverse range of steel products, the Group plays a vital role in supporting both the construction and industrial sectors. Its main offerings include:

• Steel bars for structural reinforcement in construction
• Wire rods for use in construction and various industrial applications
• Steel pipes designed for fluid transport and structural purposes in both construction and industry applications
• Pre-stressed concrete steel wire and strand for infrastructure projects
• Steel mesh for concrete reinforcement
• Custom-cut and bent steel bar services, tailored to meet specific construction requirements, promoting efficient resource utilisation and minimise material waste

Note: Effective 31 July 2025, steel mesh and custom-cut and bent steel bar services are no longer part of the Group’s product portfolio following the strategic disposal of Southern Steel Mesh.



Our Approach
The Group adopts a range of ISO management systems and operates accredited testing and calibration laboratories, each with clearly defined objectives to enhance operational excellence, ensure compliance, and support continuous improvement. To strengthen the credibility of its products and services, the Group ensures that its steel products consistently meet both local and international quality standards. These certifications reaffirm its unwavering commitment to delivering high-quality steel solutions while advancing sustainability across all operations.

Our Initiative
The Group maintains 48 products licensed under the Product Certification Scheme of SIRIM QAS International, and other recognised product certification bodies, demonstrating its commitment to quality assurance and regulatory compliance.



The Group continues to expand its portfolio of environmentally friendly products under the Product Eco-Labelling Scheme of SIRIM QAS International and the MyHIJAU Mark, issued by the Malaysian Green Technology and Climate Change Corporation (MGTC).

In FY2025, the Group successfully obtained Product Eco-Labelling certificates and MyHIJAU Mark for two steel products of SPC. Additionally, six steel pipe products of SPIM were certified with Product Eco-Labelling certificates.