Environment

• Greenhouse Gas Emissions
• Air Emissions
• Energy Management
• Water Security
• Water (Effluent)
• Circular Economy and Resources
• Waste Management

Greenhouse Gas Emissions

Description

Greenhouse gas (GHG) emissions are the main driver of climate change, which is an issue of concern that needs immediate attention and mitigation actions by all stakeholders. Iron and steel industry, as a hard-to-abate sector, is one of the significant contributors of GHG emissions and has been urged to adopt decarbonisation strategies to reduce their overall environmental footprint.

Business Model and Value Chain

The Group is cognisant of the potential implications arising from its GHG emissions. The Group’s reliance on electricity as an Electric Arc Furnace (EAF) steel manufacturer and Malaysia’s high Grid Emission Factor (GEF) contributes substantially to its GHG emissions. The forthcoming introduction of a carbon pricing mechanism may directly affect the Group through taxation and indirectly via increased electricity tariffs. However, the impact is expected to be significantly less compared to that on Blast Furnace steel operators. The Group is also working to reduce its GHG emissions through process optimisations and technology upgrades.

Across the value chain, the Group is observing a growing demand from customers for lower carbon steel products to support their own decarbonization goals. The inability to demonstrate meaningful reductions in emissions could limit the Group’s access to export markets that enforce carbon border adjustment mechanisms, and may also affect relationships with buyers who prioritise sustainable sourcing. The Group is also expecting that investors, lenders, and regulators will place greater emphasis on emission performance, which could influence access to capital and compliance obligations.

Strategy and Decision Making

The Group apprehends the importance of controlling GHG emissions in mitigating climate change and aspires to contribute by monitoring and reducing our environmental footprint as stated in our environmental policy statement. The Group continues its effort to enhance and keep abreast the knowledge and skills of our employees in climate related matters by sending representatives to attend relevant seminars / webinars hosted by International Financial Reporting Standards (IFRS), Malaysia Iron and Steel Industry Federation (MISIF), Bursa Malaysia, PwC Malaysia, etc.

As the largest GHG emitter within the Group, SSB actively participates in global efforts to mitigate climate change. One of its key contributions is the consistent provision of data for Malaysia’s Biennial Transparency Report (BTR). The BTR, submitted every two years to the United Nations Framework Convention on Climate Change (UNFCCC), includes the National Inventory Report (NIR), updates on progress toward Nationally Determined Contributions (NDCs), relevant policies and measures, and other climate-related information.

SSB has signed up to be an official supporter for TCFD since 2023. Following the disbandment of TCFD, the Group adopted its recommendations, comprising 4 pillars, namely Governance, Strategy, Risk Management and Metrics and Targets as the foundation for transitioning to IFRS S1 and S2.

Low Carbon Transition Plan

In FY2024, the Group drafted its low carbon transition plan based on prevailing circumstances and best available information, data, and assumptions. Among these is the recognition that electric arc furnace technology is currently considered the greener option among iron and steel making technologies, offering significantly lower carbon emissions. Globally, EAF currently is the preferred option for decarbonisation strategy.

The low carbon transition plan was reviewed in FY2025. As part of this process, the Group has temporarily suspended operations at its EAF plant, recognising that EAF technology has significantly evolved over recent decades, particularly in term of efficiency and energy consumption. The Group will continue to closely monitor technological advancements to determine the most appropriate options in due course.

The planned strategies of the Group under its Low Carbon Transition Plan remain largely intact, except for the timeline to review technology upgrade options aimed at energy saving and efficiency. This review has been brought forward from long-term horizon (FY2036-FY2050) to short- to medium-term (FY2026-FY2035), in recognition of the evolving landscape of EAF technology in energy-saving. The Group aims to pursue its transition in line with the revised implementation phases, subject to appropriate timing and industry dynamics. Annual reviews will be conducted to assess progress and incorporate any necessary updates or changes. The key focus areas include:

a) Technology upgrade

b) Process optimisation

c) Alternative material

d) Renewable energy

e) Green energy

f) Offsetting residual emissions

Disclaimer:

This Low Carbon Transition Plan is intended to align The Group’s business model in regard to The Group’s climate commitment to reduce its carbon footprint. This Low Carbon Transition Plan contains forward looking statements which may include but not limited to future events, trends, plans or expectations relating to The Group’s business, results of operations, performance, and strategies. Such forward looking statements are based on current circumstances and currently available information, data, and assumptions, and are not a representation or guarantee of future performance or developments. This Low Carbon Transition Plan is subject to continuous review according to evolving policies, acts and regulations and is not intended to have any legal binding effect although The Group has every intention to use reasonable efforts to abide by the same in good faith. As such, The Group shall not be responsible or liable in any manner, whether at law or in equity, for any loss or damage whatsoever, howsoever arising (whether for breach of contract, tort (including negligence), misrepresentation, warranties, indemnity, statutory or strict liability) arising from or in connection with The Group’s forward looking Statement and Low Carbon Transition Plan, or for any loss or damage (whether direct or indirect, consequential, incidental, special or exemplary damages), howsoever incurred or suffered by any person (whether direct or indirect), arising from or in connection with The Group’s forward looking Statement and Low Carbon Transition Plan.

Financial Effects

At present, The Group is unable to quantify the financial impact of its GHG emissions. However, the Government of Malaysia has announced the introduction of a carbon pricing mechanism for the iron and steel sector, and the energy sector in 2026. The implementation is expected to affect the Group’s operations directly via taxing mechanism and indirectly through increased electricity tariff, increased cost of materials and increased compliance requirements. The Group anticipates that the financial implications could be significant, although the extent remains highly uncertain, as the carbon pricing mechanism is expected to influence the entire value chain of the iron and steel industry.

Climate Resilience

The Group believes its current measures are reasonably effective in addressing potential impacts from its GHG emissions and continue to pursue efforts to reduce emissions across its operations. These efforts include, but are not limited to:

• Quantification and monitoring of GHG emissions

• Process optimization and energy saving projects

The Group will closely monitor forthcoming government announcements on the carbon pricing mechanism and align its strategies accordingly to ensure compliance and resilience.

Our GHG Emissions

Summary of GHG Emissions

The Group is accountable for the GHG emissions from all upstream and downstream companies under the operational control consolidation method. During this reporting cycle, several corporate developments have influenced the total emissions reported for FY2025. This includes the extension of financial year by an additional quarter (3 months) to 30 September 2025, the temporarily suspended EAF plant operations, and the strategic disposal one of its subsidiaries, SSM. These factors have contributed to variations in the Group’s overall emissions profile for FY2025.

The GHG emission of The Group are summarized in the tables below:

The Group is still expanding its Scope 3 GHG emission and plannings are in place to include more categories in future reporting. In the meantime, The Group has identified that it does not have emissions in the following categories:

•      Category 11 – Use of Sold Products

• Category 14 – Franchises

Methodology, Inputs and Assumptions

The Group calculates its Scope 1, Scope 2 and Scope 3 GHG emissions using the indirect measurement method, as direct measurement is currently unavailable. In FY2025, The Group standardised all GHG emission calculations in alignment with the GHG Protocol framework. Upstream emissions, previously calculated using ISO14404, have been transitioned to the GHG Protocol. This alignment serves as a preparatory step toward adopting IFRS S1 and S2, and supports readiness for potential future implementation of a carbon pricing mechanism.

For Scope 1 emissions, The Group has determined that direct emission from Fire Suppressant System and Air Conditioning are immaterial, contributing less than 0.5% of total emissions. Accordingly, these sources have been excluded from material reporting.

The Group calculates its Scope 2 GHG emissions using the location-based method as we do not possess contractual instrument for market-based method. In order to calculate our location-based emissions, the Group applies the Grid Electricity Emission Factor of Peninsular Malaysia, as published by Suruhanjaya Tenaga (ST). The most recent GEF is used to calculate the emission of the current reporting year.

The Group acknowledges that ST revises the published GEF but in line with common reporting practices, we do not retrospectively adjust previous published inventories when updated emission factors are released after the reporting cycle in order to avoid frequent restatement of historical data and ensure consistency in reporting.

The Grid Electricity Emission Factor (“GEF”) used for our report is tabulated as below:

For Scope 3 emissions, the Group utilises the distance-based method to calculate both Category 7 – Employee Commuting and Category 8 – Business Travels.

Global Warming Potential (GWP) Values

The Group applies the GWP values based on a 100-year time horizon from the Intergovernmental Panel on Climate Change (IPPC) Sixth Assessment Report (AR6) to convert constituent gases into CO2 equivalent values. These represent the most recently published GWP values by IPCC.

Metrics and Targets

As part of our commitment to support government policy such as New Industrial Master Plan (NIMP) 2030, The Group has established a few GHG emission reduction targets. These targets comprise of Scope 1, Scope 2 and Scope 3 targets at different time horizons.

Performance against the GHG Emissions Targets

The Group previously set three GHG emission targets, all of which reached their respective target years within this reporting cycle. The Group’s performance against these targets is listed below:

The Group will be looking to establish new targets for FY2026 onwards to replace these targets which have been accomplished.

Air Emissions

Description

The iron and steel industry is a heavy industrial sector where air pollution remains a significant environmental concern. Its production processes emit particulate matter and various gases. Under the Environmental Quality (Clean Air) Regulations 2014, it is mandatory to ensure that these emissions remain within the permissible limits.

Business Model and Value Chain

Emissions are inherent to the processes within iron and steel industry. As an environmentally responsible corporation, the Group has expressed its commitment to fulfil environment compliance obligations across both upstream and downstream operations. The Group identified internal air emitting processes and determined that 56% of its sites fall under the scope of the Environmental Quality (Clean Air) Regulations. This coverage will increase to 100% following the disposal of equity in SSM.

The Group previously focus on its largest emitter and disclosing emission data solely for SSB. With expanded monitoring, the Groups now maintains a broader oversight across 100% of its operations. Over the years, proactive measures have been implemented to keep emissions within permissible limits, contributing to the protection of air quality and public health. The current and anticipated effect on the Group’s operations and value chain is minor, and the Group remains in compliant with the applicable regulatory requirements. 

Strategy and Decision Making

The Group demonstrates its commitment to environmental compliance through its Environmental Policy Statement, which emphasises continual improvement to enhance environmental performance. In alignment with the Environmental Quality (Clean Air) Regulations 2014, the Group conducted a groupwide assessment to identify sources of air pollutant emissions and define key monitoring parameters. Specifically, this is in reference to:

a) Third Schedule, Regulation 13, Table B – Production and Processing of Ferrous Metals (Iron and Steel Mills).

b) Second Schedule, Regulation 13, Table I, No. 2 - Combustion emissions from fuel burning equipment and incinerators not covered by the First Schedule.

c) Environmental Quality (Industrial effluent) Regulations 2009, Fifth Schedule, Standard B.

A summary of the relevant requirements is listed as below.

All sites subject to these regulations are equipped with air pollution control installations to ensure compliance. Additionally, the Group appoints certified competent personnel to supervise and maintain operations that emit pollutants, ensuring optimal performance and adherence to environmental standards. It is the practice of the Group to engage accredited laboratories to conduct isokinetic stack and air emission measurements. These assessments are performed at predetermined intervals, with results continuously monitored to maintain compliance with the Clean Air Regulations.

Volatile Organic Compounds (VOCs) are not listed in Table B – Production and Processing of Ferrous Metals (Iron and Steel Mills) under the Environmental Quality (Clean Air) Regulations 2014 for Electric Arc Furnaces and Rolling Mill and therefore are not among the pollutants required to be monitored for iron and steel mills.

Financial Effect

The Group assesses the financial implications of air emissions in relation to sustainability-related risks and opportunities. At present, both current and anticipated financial impact are considered negligible. The risk of non-compliance with clean air regulations, such as emissions exceeding permissible limits is rated as trivial, as the Group has implemented proactive measures across the short-, medium-, and long-term to minimise pollutant emissions.

All air pollution control systems are well maintained, and emissions are monitored periodically to ensure compliance. Based on current performance and anticipated regulatory developments, the Group has concluded that the financial effect of air emissions is minor.

Resilience of the Group's Strategy and Business Model

The Group considers its current approach and the measures implemented are adequate for consistently meeting applicable air emission regulations. In the event that existing technologies become insufficient to ensure compliance, the Group will evaluate and adopt the latest available technologies to maintain adherence to environmental standards. This proactive stance supports the resilience of the Group’s strategy and business model by ensuring continued regulatory compliance and reinforcing our commitment to environmental stewardship.

Metric and Targets

The Group has implemented a range of proactive measures across the short, medium, and long term to minimise pollutant emissions. These efforts have enabled the Group to consistently meet regulatory requirements.

The reheating furnaces in SSB’s hot rolling mills emit pollutants as a result of fuel combustion. The conversion from medium fuel oil to cleaner natural gas has kept pollutant levels consistently well below regulatory limits.

The Continuous Emission Monitoring System (CEMS) installed at the steelmaking plant samples, analyses, and records pollutant levels every three minutes. This real-time data is visualized both at the plant and by the Department of Environment, enabling continuous monitoring in compliance with regulatory requirements. The pollutant concentration trends allow the plant’s certified competent personnel to proactively analyse, predict, and plan maintenance activities for the baghouse dust removal and collection system.

The rate of key pollutant emission as illustrated shows that from FY2021 to FY2024, SSB is able to maintain pollutants emissions rate at below 70% of the regulatory limit set under Environmental Quality (Clean Air) Regulations 2014. SSB will retain the same target until FY2025.

Energy Management

Description

The iron and steel industry is among the most energy-intensive industrial sectors, accounting for approximately 7% of global man-made greenhouse gas emissions. With rising energy costs and escalating climate concerns, efficient energy management is critical for minimising environmental impact, enhancing operational efficiency, and reducing production costs.

Business Model and Value Chain

The Group relies on several key non-renewable energy sources: electricity, natural gas, diesel, and coke. All energy inputs are sourced locally, except for coke, which is imported from various countries in Asia. Electricity and natural gas are the primary energy sources consumed in large volumes across the operations, particularly at SSB, SPIM & SSP, and SPC.

Electricity is procured through the national grid, while natural gas is supplied via a dedicated pipeline—both from sole providers. Diesel, in contrast, is readily available from multiple vendors. This reliance on single-source suppliers for electricity and gas introduces a significant risk to production continuity in the event of supply disruptions caused by climate-related events, regulatory changes, or infrastructure failures.

The Group transitioned from medium fuel oil to natural gas to improve energy efficiency and reduce emissions. While natural gas supply is generally stable, the April 2025 pipeline fire in Putra Heights led to temporary supply limitations. However, through coordinated efforts across all operating plants, the impact on operations was minimal. According to the Malaysia Energy Statistics Handbook 2023 by the Energy Commission, the System Average Interruption Duration Index (SAIDI) for Peninsular Malaysia was 0.84 in 2022, indicating a generally reliable electricity supply. Nonetheless, as the national grid remains heavily dependent on fossil fuels, electricity costs are expected to rise, increasing the Group’s exposure to energy price volatility.

Given the critical role of energy in our operations, any disruption in supply can significantly affect the Group’s value chain. To mitigate these risks, the Group is actively exploring energy efficiency initiatives, and strategies to enhance energy resilience.

Strategy and Decision Making

The Group’s Energy Policy statement demonstrates the commitment to improving energy efficiency, performance, and consumption, while ensuring compliance with the applicable laws, regulations, and other relevant requirements. In line with this commitment, the Group has reviewed the requirements under the Energy Efficiency and Conservation Act (EECA) 2024. Based on our assessment, the following companies within the Group fall within the regulatory scope of the EECA, which applies to large energy consumers with annual energy consumption exceeding 21,600 gigajoules.

The Group has a total of 4 Registered Energy Manager (REM) Type 2 stationed at SSB Prai and SPC Shah Alam. The designated REM is responsible for submitting annual Energy Efficiency and Conservation Report to Energy Commission, in accordance with regulatory requirements.

Additionally, 100% of the companies within the Group have implemented an Energy Management System (EnMS), demonstrating a consistent and structured approach to energy governance. To further strengthen our energy oversight, the Group has established an Energy Management Committee tasked with promoting efficient energy use and ensuring compliance with EECA 2024.

The Group recognises that reducing energy consumption directly lowers reliance on fossil fuels and contributes to the mitigation of GHG emissions. In alignment with our climate-related goals, we acknowledge the strategic importance of dedicated energy management practices. To support our transition toward a low-carbon economy, the Group is committed to a proactive and structured energy management approach, which includes:

• Monitoring and reporting energy usage across all operations to ensure transparency and accountability.

• Implementing energy-saving projects to enhance energy efficiency.

• Reducing energy intensity through continuous process improvements and optimisation.

• Staying informed on advancements in energy-saving technologies to guide investment decisions and ensure alignment with best practices.

These initiatives form part of our broader climate transition plan, which aims at reducing GHG emissions in line with national climate targets while improving operational resilience and cost efficiency.

Financial Effects

The Group assesses the financial implications of energy management in relation to sustainability-related risks and opportunities and climate-related risks and opportunities. Given the energy-intensive nature of our operations, the Group is exposed to several factors that may result in increased operational and compliance costs, including:

• Energy supply interruptions from energy providers may results in production losses, equipment breakdowns, elevated maintenance and repair costs, and delays in delivering finished products to key customers.

• Inefficient energy use contributes to energy wastage, higher operational costs, and elevated GHG emissions, which may affect our environmental performance.

• Introduction of new laws and regulatory changes such as implementation of EECA 2024, introduce new compliance requirements, including mandatory energy audits and reporting obligations.

• Rising energy cost, particularly due to carbon tax affecting the electricity tariff, are expected to increase the Group’s operating expenses and impact the cost structure across the entire value chain.

As the Group’s business model relies heavily on electricity and natural gas, these risks pose significant financial implications. The Group anticipates that both current and anticipated financial impact will be material. The implementation of mitigation strategies which includes enhancing energy efficiency, and adopting best practices in energy management is important for energy resilience and long-term continuity.

Resilience of the Group's Strategy and Business Model

The Group considers its current strategy, business model, structured and proactive approach to energy management sufficient to address the SRO and CRO in ensuring regulatory compliance and contributing to the reduction of electricity and natural gas consumption. While the Group has no direct control over potential supply interruptions of electricity and natural gas, it acknowledges this as a risk. However, based on current assessments, the supply of both utilities remains reasonably stable, and no immediate significant disruptions are anticipated.

Description

The Group refers to 2006 IPCC Guidelines for National Greenhouse Gas Inventories (net calorific value of diesel oil) to calculate the diesel consumption in steel production, and ISO 14404 Calculation Method of Carbon Dioxide Emission Intensity from Iron and Steel Production (energy consumption factor of EAF coal) to calculate coke consumption in steel production. Both references are internationally recognised with credible net calorific value and energy consumption factors.

The total energy consumption (electricity, natural gas, diesel, and coke) of the Group is as shown below:

The Group’s total energy consumption is primarily driven by its upstream operations, with SSB’s EAF steelmaking and hot rolling identified as the most energy-intensive processes. In contrast, energy consumption in downstream operations is significantly lower, accounting for approximately 8.2% of the Group’s total energy usage in FY2025.

Over the years, the Group has progressively invested in Energy Management System (EMS) to support its facilities in optimizing electricity usage, avoiding excessive maximum demand, and identifying opportunities for energy efficiency improvements. EMS is a computer-aided platform that enables real-time visualization and monitoring of electrical power consumption across key production equipment and machinery. These efforts contribute to reducing environmental impact and enhancing operational sustainability.

The EMS in the Group is listed as below:

As outlined in the topic of Response to Climate Change, the Group set a specific target in FY2023 for SPC to reduce natural gas consumption, aiming to lower its Scope 1 GHG emission intensity by 30% from FY2022 to FY2025. Through various energy improvement projects, SPC achieved more than 30% reduction by FY2025.

The Group’s effort in energy management for both upstream (SSB) and downstream (SSM, SPC, SPIM & SSP) operations are as below:

The Group has actively executed 10 energy projects in FY2025. The list of projects and respective energy savings achieved are as below:

Water Security

Description

The iron and steel industry consumes significant amount of water, specifically in its upstream operations. Water is primarily used for the cooling of products, processes, and equipment, as well as for rinsing of products and other auxiliary purposes.

Business Model and Value Chain

The Group acknowledges that Malaysia is endowed with abundant water resources. However, without coordinated efforts to enhance water security, long-term degradation of water quality and ecosystems may occur, posing risks to environmental sustainability.

In FY2022, The Group referred to projection by National Water Research Institute Malaysia to identify potential water stress. In FY2025, the Group conducted a reassessment of water-related risk using the tool provided by World Resources Institute’s Aqueduct Water Risk Atlas across its operations. The assessment revealed that all current operation sites are located in areas of low water stress. However, 3 sites - SSM Klang, SSM Rawang and SPC Shah Alam are projected to face low to medium water stress by year 2030.

The Group relies primarily on municipal potable water for its operation. While the facilities are located in regions classified as low water stress, any disruption in municipal supply could pose a risk to operational continuity. To mitigate this, the Group has implemented several proactive measures to strengthen long term water security.

Strategy and Decision Making

The Group believes that effective communication can promote more responsible water consumption by helping individuals move from a lack of awareness about water security issues to adopting efficient water usage practices. This support efforts to mitigate the risk of high and uncontrolled water consumption in production process, which may strain local water resources. The Group communicates its commitment to conserve and used water efficiently through its Environmental Policy Statement, promoting the adoption of reclaim, recycle, and retreat approach to secure water supply and reduce potential future water stress. The message is shared with employees and the public via the intranet, website, internal trainings, and meetings.

The Group has conducted a comprehensive assessment of its water withdrawal, consumption, and discharge across all operational sites. This analysis was performed by location, source, and discharge destination, and the resulting data is presented in the Metrics and Targets section of this report. As part of its ongoing water stewardship efforts, the Group evaluates this data and identifies SSB and SPIM as priority sites for implementing long-term water management strategies. These sites were selected based on factors such as volume and intensity of water use and operational criticality.

Financial Effect

The Group assesses the financial implications of water security in relation to SRO. Based on historical data, the financial impact of water supply disruptions on operations has been low. 

Potential risks of water supply disruptions include production losses and increased operational cost. These risks are considered minor, as the Group has implemented proactive measures across the short-, medium-, and long-term to secure water availability. These measures include reclaiming, recycling, and retreating water as part of its water management strategy.

All the recycled water treatment plants are well maintained, and water quality is regularly monitored to ensure a backup supply for production processes in the event of potable water supply disruption. These measures help mitigate operational risks and reduce dependency on municipal water sources. The Group remains compliant with the applicable regulatory requirements and continue to monitor water related risk as part of its broader environmental and operational risk management.

Resilience of the Group's Strategy and Business Model

The Group considers its current approach and measures implemented are sufficient to minimise potential operational interruptions arising from both anticipated and unexpected water stress. To further strengthen water security, the Group is actively exploring additional strategies to reduce reliance on municipal potable water supply.

One such initiative is the planned implementation of a rainwater harvesting system, which will serve as an alternative water source and enhance the Group’s resilience to supply disruptions. This initiative complements existing water recycling and treatment systems already in place across operational sites. In FY2025, there were no incidents of non-compliance with water quality or quantity permits, standards, or regulatory requirements, reflecting the effectiveness of the Group’s water management practices.

Metrics and Targets

Water Withdrawal

Water Consumption

Water Discharge

Water Management Plan

The long-term water management plan of SSB is to progressively set up closed loop Recycled Water Treatment Plant (RWTP). SSB collaborated with the water treatment specialist to design and build closed loop RWTP to treat, recycle and reuse the processed water in steel making plant and hot rolling mills.

In FY2023, SSB invested RM3 million to build its third closed loop RWTP for wire rod hot rolling operation. This initiative enables SSB to further conserve precious water resources while reducing operational costs. The RWTP has been fully operational since Q1 FY2024.

Additionally, SSB collaborates and works with water treatment contractor to treat process water for continuous circulation, ensuring its effective reuse within operation. The Group has set the target for SSB to reduce water use by 70 Megalitres from FY2020 to FY2025. The cumulative reduction in water use at the end of FY2025 is 125 Megalitres. The target of 70 Megalitres from FY2020 to FY2025 is worked out to be an average reduction of approximately 2.0% per year of SSB’s total water consumption.

In SPIM Nibong Tebal, the Auto Galvanising Line is equipped with a quenching tank that rapidly cools hot galvanised pipes using water. To enhance operational efficiency and reduce water consumption, the system incorporates a closed-loop water recycling process. In this system, heated water from the quenching tank is directed to a recycling pool, where it is cooled and then mixed with concentrated water from the Reverse Osmosis (RO) system. The blended water is subsequently recirculated back to the quenching tank.

By effectively utilising RO concentrate, the system significantly reduces dependence on fresh municipal potable water. The closed-loop system was fully operational in FY2025 and has successfully contributed to measurable water savings. This water recycling system reflects the Group’s commitment to innovation and environmentally friendly industrial practices. It ensures high-quality production while conserving water resources and reducing operational costs.

The Group has set the target for SPIM Nibong Tebal to reduce water use by 3.30 Megalitres from FY2025 to FY2030. The cumulative reduction in water use at the end of FY2025 is

0.19 Megalitres. The target of 3.30 Megalitres from FY2025 to FY2030 is worked out to be an average reduction of approximately 2.6 % per year of SPIM Nibong Tebal’s total water consumption.

Water (Effluent)

Description

Specific operations within iron and steel manufacturing—such as pickling, descaling, cooling, and rinsing, generate wastewater laden with a variety of pollutants, including heavy metals, suspended solids, hydrocarbons, and chemical reagents. Effective effluent treatment is essential to remove these contaminants, ensuring adherence to environmental discharge standards and facilitating the recycling or reuse of treated water within industrial processes.

Business Model and Value Chain

In Malaysia, water effluent treatment is regulated primarily by the Environmental Quality Act (EQA) 1974 and its related regulations, particularly the Environmental Quality (Industrial Effluent) Regulations 2009. These regulations govern the discharge of wastewater from industrial and other sources, aiming to protect water resources from pollution. A competent person certified by Department of Environment (DOE) is required to supervise the industrial effluent treatment system.

The Group has identified that, among all operational units, the pipe manufacturing processes at SPIM and SSP facilities are the primary sources of effluent generation. The effluent originates predominantly from two streams: process wastewater and spent coolant. The current and anticipated effect of effluent generation on the Group’s operations and value chain is assessed to be minor. The Group remains in compliant with the applicable regulatory requirements and the competent person continues to monitor the treatment of effluent.

Strategy and Decision Making

The Group recognises that regulatory compliance is essential to preventing water pollution and safeguarding natural resources. As part of its environmental management strategy, SPIM and SSP have appointed competent persons certified by the DOE to oversee effluent treatment systems. At both SPIM and SSP, effluent generated from process wastewater and spent coolant is treated onsite in accordance with the Environmental Quality (Industrial Effluent) Regulations 2009, Standard B. Following treatment, the effluent is discharged as surface water into drainage systems and subsequently into nearby rivers, in line with regulatory requirement.

Financial Effect

The Group assesses the financial implications of water (effluent) in relation to Environmental Quality (Industrial Effluent) Regulations 2009. The risk of non-compliance is considered negligible (trivial), as effluent treatment is conducted in accordance with regulatory standards prior to discharge. As a result, the Group has determined that the current financial effect of water effluent is negligible.

Resilience of the Group's Strategy and Business Model

The Group considers its current approach and implemented measures are adequate for managing effluent related risks. These practices are embedded within its operational procedures and environmental management systems. Given the negligible risk and stable regulatory environment, the Group intends to maintain its current strategy and treatment practices, which it considers resilient against likely changes in environmental regulations or operational conditions.

Metrics and Targets

The amount of treated water (effluent) discharged is tabulated below: 

The quality of the treated water (effluent) is as below: -

Treated water (effluent) for wastewater - SPIM and SSP Butterworth

 Treated water (effluent) for spent coolant – SPIM and SSP Butterworth

 Treated Water (Effluent) for wastewater – SPIM Nibong Tebal

Circular Economy and Resources

Description

The circular economy is a key initiative outlined in Malaysia’s New Industrial Master Plan 2030. Its core principle is to minimise waste and maximise resource efficiency by keeping materials in use for as long as possible through strategies such as reuse, recovery, remanufacturing, and recycling. In the context of the steel industry, adopting circular economy practices can significantly reduce environmental impacts. Steel recycling plays a vital role in advancing circularity within the iron and steel sector.

Business Model and Value Chain

The Group is a well-established producer and distributor of steel products, utilising EAF and hot rolling technology in its upstream operations. Steel scrap serves as the primary input for EAF steelmaking at SSB, where substantial quantities of both pre- and post-consumer scrap are recycled. These materials are transformed into semi-finished billets, which are subsequently hot rolled into steel bars and wire rods for use in the construction and industrial sectors.

• Pre-consumer scrap is generated during billet casting, hot rolling, and downstream processing. This material is fully recovered and recycled within SSB’s EAF operations.

• Post-consumer scrap originates from construction and industrial products at the end of their life cycle. It is collected and reintegrated into the production process, enhancing resource efficiency, and reducing emissions.

This closed-loop system significantly reduces the Group’s dependence on virgin raw materials and contributes to lowering carbon emissions associated with steel production. The Group’s role in advancing steel circularity is illustrated in the figure below.

Strategy and Decision Making

The Group has an Environmental Policy statement which demonstrates its commitment to enhance circularity through recycling and/or reusing steel scrap generated internally within the Group as a steel making resource and promote circular economy by maximising the use of steel scrap as a key resource in steel making and reduce reliance on natural resources. As part of a major upgrade initiative, SSB’s EAF operations have been temporarily suspended since April 2025. Consequently, the Group has paused the direct use of steel scrap in its production process during this period.

Despite this temporary suspension, the Group remains committed to advancing circularity. All pre-consumer scrap generated within its operations continues to be systematically collected and responsibly transferred to external recyclers. This ensures the scrap remains within the recycling loop, supporting resource efficiency and contributing to emissions reduction.

This approach not only aligns with global circular economy efforts but also enhances the economic value of the Group’s operations through responsible resource management.

Financial Effects

Adopting circular economy practices in steelmaking can significantly reduce environmental impacts, particularly through lower emissions compared to conventional Blast Furnace–Basic Oxygen Furnace (BF-BOF) methods that rely on virgin ore. This approach helps slow down the depletion of natural resources and reduces pollution across air, water, and land.

The Group also recognises that the impact of circular economy adoption is closely tied to national policies and market dynamics. As the world transitions to a lower carbon economy, the price of steel scrap is expected to increase, which will be disadvantageous to EAF steel mills without counterbalance initiatives from the government and market. Key initiatives include the implementation of carbon pricing mechanisms such as carbon tax, stimulating demand for low-emission steel, and ensuring the effectiveness of strategic frameworks like the Malaysia Steel Industry Roadmap 2035. These elements are expected to influence the cost-benefit balance and long-term financial viability of circular practices within the Group’s operations.

The Group estimates that the current financial effect is negligible until we resume our steelmaking plant operations.

Resilience of the Group's Strategy and Business Model

The Group considers its current approach and implemented measures to be sufficient in sustaining support for circular economy practices. These efforts are designed to balance both the costs and benefits to the Group, while maintaining operational efficiency and environmental responsibility.

The Malaysia’s New Industrial Master Plan 2030 and the recently launched Malaysia Steel Industry Roadmap 2035 is expected to further strengthen the Group’s resilience by providing a structured framework that manage over capacity, supports circularity, low-carbon transition, and sustainable growth. This alignment with national policy enhances the Group’s ability to adapt to evolving regulatory, market, and environmental expectations.

Metrics and Targets

Based on the circularity economy model of the Group, the material consumption of the Group is tabulated as below:

SSB strives to enhance circularity through maximisation of steel scrap usage in EAF by setting quantitative target to use 85% steel scrap for steel making from FY2021 to FY2025. In Q4 of FY2024, SSB has reviewed the target of using > 85% steel scrap for steel making from FY2021 to FY2025. SSB has determined that the use of recycled content will facilitate future benchmarking.

Waste Management

Description

Waste management is one of the most important environmental protection strategies. The goal of waste management is to reduce the total amount of waste that is directed to disposal and minimise the environmental burden through value creation, hence supporting sustainable development and the transition towards circular economy.

Business Model and Value Chain

The Group’s manufacturing processes generate both co-products and wastes materials. In line with our commitment to resource efficiency, the Group focuses on maximising the recycling, reuse, and recovery of these materials to minimize environmental impact.

In Malaysia, hazardous waste is defined as any waste falling within the categories of waste listed in the First Schedule of the Environment Quality (Scheduled Wastes) Regulations 2005. The Group identifies the waste or co-product generated based on their characteristic and potential to adversely affect public’s health and environment and categorised into:

• Hazardous waste (herein referred to as Scheduled waste)

• Non-hazardous waste.

The scheduled waste is then classified according to the First Schedule (Regulation 2) (Environment Quality (Scheduled Wastes) Regulations; 2005). The type of scheduled waste generated by the Group is listed according to the scheduled waste code, as below:

The Group takes steps to ensures our scheduled waste is properly stored, labelled, and disposed through licenses contractors in compliance with the environmental regulations. Non-hazardous waste, such as metal scraps and slags are sent for recycling or reuse where feasible.

Strategy and Decision Making

The Group affirms its commitment to waste management through its Environmental Policy Statement, which promote the principles of reduce, reuse and recycling.

Scheduled Waste Disposal

The Group remains committed to complying with the Environment Quality (Scheduled Waste) Regulations, 2005 and seek opportunities to go beyond regulatory requirements where feasible. In addition, the Group aims to enhance the resource value of co-product or waste through research and development, collaboration with external parties, and initiatives that promote recycling and reuse of both scheduled and non-hazardous waste and co-product. The efforts of the Group thus far are as elaborated below:

a) The steel making plant of SSB generates EAF dust, a co-product under the classification of Scheduled Wastes Code, SW104. EAF dust has a high zinc compound which can be recovered. SSB has collaborated and developed a local licensed recycler, which is nearby to us to recycle the EAF dust and extract valuable zinc compound which is then processed into zinc ingot for industrial application. The flow of zinc-containing EAF dust from steelmaking to the zinc recovery industry, and back to the steel industry, creates an industrial ecology of zinc and steel.

b) Zinc ash and zinc dross generated by SPIM is another co-product classified under the Scheduled Wastes Code, SW104. SPIM disposes zinc ash and zinc dross to licensed collectors and recyclers monthly for recycling into products, such as zinc ingot. According to the First Schedule of the Environment Quality (Scheduled Waste) Regulations, 2005, the maximum scheduled waste quantity that can be stored at premises is 20mt and the storage duration should not exceed 180 days.

c) The Group engages external licensed contractors to collect the waste as part of our obligation to comply with the regulatory requirement. The licensed contractors will treat the scheduled wastes in the following manner:

Non-Hazardous Waste Disposal

The Group believes that effective management of waste helps reduce the volume of waste entering the general waste stream, thereby reducing potential environmental impacts. Concerted effort is made to reduce waste through reuse, recycling and recovery wherever possible, supported by research and development and collaboration with external parties. The initiatives of the Group in waste management to date are outlined below:

a) The steel making plant in SSB generates EAF slag in its steel scrap melting process. EAF slag is a non-metallic co-product, which is classified as a non-scheduled waste. EAF slag is used as an alternative to rock fragments, which is commonly used as an aggregate for landfill and replacement of granite aggregate. The strategy of SSB is to treat EAF slag in-house to recover the metallic waste before further processing the slag for intended applications. The metallic waste recovered will then be reused in EAF as an input material for steel making. The in-house treatment and processing process reduces the need for external transportation and hence, reduces carbon emissions. Currently, 100% of the treated EAF slag is used as alternative rock fragments.

b) The steel making plant in SSB also generates ladle furnace slag and used refractory material, a non-metallic co-product that forms during steel refining process at ladle furnace. Ladle furnace slag is used for soil conditioning while used refractory material is crushed for reuse in EAF to improve the refractory wall lining protection of the EAF. The mixture of ladle furnace slag with used refractory materials can be disposed to bricks maker to produce cement bricks.

c) The general waste in the Group is further segregated according to 3R (Reduce, Recycle and Reuse) prior to final disposal. Old newspapers, shredded paper, magazines, malfunctioning computers, and electrical appliances are amongst the items that are being segregated before disposal as general waste.

Financial Effect

The Group is exposed to sustainability risk related to non-compliance with scheduled waste management requirements, which may arise from either the Group own operations or those of its appointed vendors. Such non-compliances can be penalised by the relevant authorities which will lead to additional costs.

The Group also discovers opportunities where effective waste management contributes positively to the Group’s financial performance by reducing disposal costs, generating revenue from recyclable and recoverable materials, and improving overall resource efficiency. The Group estimates that the current financial impact from waste management is low but anticipated to be more apparent when the steelmaking plant resumes operation.

Resilience of the Group's Strategy and Business Model

The Group considers its current approach and implemented measures are sufficient to manage waste generated from production processes efficiently. Current strategy and business model minimises the amount of waste directed to disposal, support material circularity and create value for the Group. Looking ahead, the Group aims generate additional value through further exploration and applied research

Metrics and Targets

Scheduled Waste Generation

The Group’s scheduled waste generation is as listed below:

Summary of Group's Waste Management

Targets

In line with the Group’s approach to maximise material circularity by implementing waste recycling, reuse and recovery to minimise resource consumption, the Group has set a target to avoid waste that is directed to disposal at maximum of 3%. For FY2025, the total waste directed to disposal is 0.9%.

The Group has also identified a few targets at the operating company level. SSB seeks to accomplish beyond regulatory requirements in terms of storage quantity of EAF dust. SSB collaborated with a long-term local licensed recycler and spent approximately RM1.2 million to modify the EAF dust collection facility in the 4th quarter of FY2019. The modification enabled the loading of generated EAF dust directly onto the trucks for the licensed recycler to collect for subsequent recycling in their plant. The collaboration and investment enabled SSB to set the target for closing inventory of EAF dust at a maximum of 15mt, which is 25% lower than the limit stated in the regulation.