Climate change is an imminent threat to the globe. The Prime Minister, Ismail Sabri Yaakob has announced that Malaysia aims to be a carbon-neutral nation by as early as year 2050. There will be multiple government plannings and strategies geared towards sustainability being introduced. In line with this, there will also be increased regulatory, economic and public pressure to reduce carbon emissions.

SSB utilises electric arc furnace ("EAF") for steel making. Until today, EAF remains as a greener option among the iron and steel making technologies. EAF can use up to more than 90% of recycled steel scrap, depending on the availability of raw materials and chemistry requirements of the finished product. The GHG emissions of EAF is comparatively much lower than steel mill that utilises blast furnace (“BF”) or blast oxygen furnace (“BOF”). The shift from BF-based to EAF-based steel making is part of the industry's decarbonisation drive and strategy around the globe.

The Group recognises the urgency to mitigate climate change and wishes to be part of the global effort to mitigate climate change. In this journey, we quantify our GHG emissions, promote energy conservation, water management, circular economy and waste management, as detailed in the later part of this report.

Our GHG Emissions

The Group began to report its GHG emissions in FY 2022 by conservatively setting the target to initially cover Scope 1 and Scope 2 emissions of SSB’s operations at Prai sites in Penang. Moving forward, we aim to expand the scope of reporting to include the subsidiary companies.

SSB refers to ISO 14404 (Calculation method of carbon dioxide emissions intensity from iron and steel production) and World Business Council for Sustainable Development and World Resources Institute (“WBCSD/WRI”) GHG Protocol to calculate the GHG emissions.

SSB measures Scope 1 emissions by utilising ISO 14404 to calculate direct emissions that were released during the production processes. In addition, SSB also uses GHG Protocol to calculate some categories of Scope 1, such as Mobile Sources and Purchased Electricity (not related to production, i.e. office buildings), but decided not to include their results as they accounted to only less than 0.5% of our total Scope 1 and Scope 2 emissions.

For the calculation of Scope 2 emissions, SSB utilises the grid electricity emission factor of Peninsular Malaysia which was reported in 2017 Clean Development Mechanism (“CDM”) Baseline for Malaysia that was prepared by Malaysian Green Technology Corporation (“GreenTech Malaysia”).

Being a steel making company which only utilises EAF in the production of steel, SSB’s GHG emissions are mainly contributed by indirect emissions from purchased electricity (Scope 2). Our Scope 2 emissions account for more than half of the total emissions.

Gradual progression to normalcy from the Movement Control Order (“MCO”) phase allowed for a more stable operating time which increased production in steel making. This has resulted SSB’s GHG emissions to increase from FY 2021 to FY 2022. Our GHG emissions intensity is also in the uptrend due to the increased production in EAF. We will continue to explore efforts to reduce GHG emissions.

Circular Economy

The most recycled material in the world, steel, is a flexible material that can be recycled repeatedly, hence a good model of circular economy. SSB recycles substantial quantity of steel scrap in the steel making, which is an approach to support global circularity economy. SSB also strives to recycle and reuse the co-products generated from its manufacturing processes as shown below. The recycling business model of the Group is imperative for environment sustainability, which enables preservation of natural resources.

 Reference: The European Steel Association - EUROFER, Oct 3, 2016

Recycling of Steel Scrap

SSB’s core activity is recycling of steel scrap in EAF and converts steel scrap into valuable semi-finished product billets, which are then hot rolled into steel bars and wire rods to be supplied to construction sites and steel processing industry. SSB makes an effort to enhance circularity through maximisation of steel scrap usage in EAF whilst ensuring product quality meets the customers’ requirements.

Steel scrap generated by SSB’s subsidiary companies are sent to SSB for recycling in its EAF. Apart from this, SSB has a subsidiary that provides service to construction industry by cutting the steel bar into required length or forming into the required shape prior to delivering to the construction site. With such service, steel wastage at construction sites is being reduced.

SSB strives to maximise the use of recycled and recovered steel scrap in our EAF. In FY 2021 and FY 2022, we managed to use 93% of scrap when EAF product mix was mainly construction grade with minimum industrial grade. EAF product mix is the key influencing factor that determines the percentage of recycled and recovered steel scrap used. The volume of industrial grade in the product mix is the limiting factor to ensure that we meet the quality requirement of our customers whilst optimising our efforts in preserving natural resources.

Waste Management

In the process of recycling steel scrap in the EAF, co-products are generated. SSB’s approach on co-products is to classify them based on their characteristic and potential to adversely affect public’s health and environment and into scheduled and non-scheduled waste. The co-products are then managed in accordance with the Environment Quality Act, 1974. SSB also endeavors to maximise the resource value of co-products through research and development as well as promotion in recycle and reuse of co-products. The disposal of significant co-products for recycling and reuse is shown as below: 

SSB aims to minimise the EAF dust inventory level. We have spent approximately RM140,000 to modify the dust collection facility in the 4th quarter of FY 2019 to enable the loading of generated dust directly onto a specially designed roll-on-roll-off trucks for the licensed recycler to collect. The EAF dust inventory has been maintained at 0Mt from FY 2020 to FY 2022.

Ladle furnace slag is another non-metallic co-product that formed during steel refining process at ladle furnace, which is also categorised as non-scheduled waste. Ladle furnace slag together with other used refractory materials are disposed to bricks maker to produce cement bricks.

Steel making and hot rolling industry requires vast usage of water. Water is used mainly for the cooling of products, processes and equipment. Water is also used for other purposes such as rinsing of products and cleaning.

Malaysia is classified as one of the countries with low to medium water stress by year 2040 (Source: World Resource Institute). The projection done by National Water Research Institute Malaysia shows that coastal area along the west coast of Peninsular Malaysia will have high-water stress by year 2030. The Group is located at these areas where high-water stress is projected. We are concerned about the future of water resources and security as the nature of our operations consume substantial volume of water.

The Group has several closed loop water treatment facilities, whereby the processed water is recycled, reclaimed, treated and reused for its beneficial purposes. As shown in the table below, we also have a small percentage of processed water which is being treated according to the Environment Quality Industrial Effluent Regulation 2009, Standard B prior to discharge.

By recycling the processed water, we are doing our part to conserve precious water resources and at the same time, reducing operational costs accordingly. The record of water consumption of the Group is tabulated as below:

The operations of the Group in FY 2020 and FY 2021 were affected by Covid-19 pandemic, hence, lesser water withdrawal and discharge.

The iron and steel industry is one of the most energy intensive industrial sectors in Malaysia. SSB has appointed competent Registered Electrical Energy Manager ("REEM") in line with the requirements of Efficient Management of Electrical Energy Regulations, 2008 to ensure efficient management of electrical energy. The REEM submits energy report to Energy Commission of Malaysia on half-yearly basis.

Apart from regulatory compliance, the Group is committed to be a responsible corporation by taking a proactive approach in energy conservation and energy efficiency, with the intention to mitigate climate change. The reduction in energy consumption will lead to the abatement of GHG emissions as well as reduction in energy cost.

The Energy Management Committee was tasked to plan, monitor and review the energy management activities in accordance to the Group’s Energy Policy, such as the staggered upgrading of inverter controls, conversion to energy savings light and automation of temperature control. The objective of the committee is to conserve resources by improving efficiency in energy consumption through utilisation of technology, which then contributes to a reduction in utility costs as well as GHG emissions. The Group’s achievement in energy management can be summarised in table as follows:

Project/activity and energy savings achieved in FY 2022 were listed as below:

The quantum of energy savings in FY 2022 is low due to the adverse Covid-19 pandemic impacts on the progress of various projects. The Group will continue to review and make plans to catch up as this is a temporary setback in the execution of energy management activities.