Malaysia Launches 2.5M-Ton HBI Plant in Sabah, Boosting Southeast Asia’s Green Steel Ambitions

Major HBI Facility Begins Operations in Sabah with $7.3 Billion Investment

Malaysia has taken a significant leap in green metallurgy with the launch of a 2.5 million tons per year hot briquetted iron (HBI) plant in Sabah. Developed by ESteel Enterprise Sabah, this milestone marks the first phase of a broader $7.3 billion industrial project within the Sipitang Oil and Gas Industrial Park. The investment represents one of Southeast Asia’s most ambitious clean-tech metallurgical ventures.

Prime Minister Anwar Ibrahim and Sabah Chief Minister Haji Noor led the inauguration ceremony, underscoring the project’s national importance. The initial phase utilizes natural gas to produce HBI, a critical raw material in low-emissions steelmaking. Future stages will scale operations further. These stages will add direct reduced iron (DRI) facilities and steel rolling infrastructure—each with an additional 2.5 million-ton capacity.

However, the project’s timeline faced hurdles. Technical evaluations, gas supply negotiations, and additional federal clearances pushed the plant’s operational launch past its original 2023 schedule. The facility now aims for full completion by late 2025.

Malaysia Strengthens Role in Regional Steel and HBI Markets

In addition to the Sabah development, MAEGMA Minerals has signed an MoU with Primetals Technologies for a new 2 million-ton HBI plant in Perak. It’s scheduled for a 2029 start. This shows a coordinated national strategy to cement Malaysia’s role as a key supplier of low-carbon steel feedstock in the Asia-Pacific region.

HBI, prized for its high iron content and low impurities, is increasingly used by electric arc furnaces (EAFs) to reduce emissions. Malaysia’s investments reflect growing demand for cleaner steelmaking inputs amid global decarbonization efforts. Industry players now watch how quickly downstream capabilities like rolling mills come online. Steelmaking units will also come online and complete the value chain.

SuperMetalPrice Commentary:

Malaysia’s HBI strategy signals a long-term commitment to industrial decarbonization while building value-added capacity. The scale of the Sabah and Perak projects also reveals how Southeast Asia is emerging as a serious player in green steel supply. With natural gas as a transitional fuel, Malaysia could become a model for sustainable metallurgical development in emerging markets. There is potential for future integration with hydrogen-based DRI.