Malaysian steel mills, Ann Joo Resources and Southern Steel have mutually agreed to terminate their proposed partnership with immediate effect. The decision came in the wake of uncertain market conditions caused by the COVID-19 pandemic, according to the company’s release dated May 27.
These mills had formed a joint venture to produce long products by signing a memorandum of understanding in October 2019. The JV looked to synergise opportunities in the long steel product manufacturing business in Malaysia. Ann Joo had 55pc stake and Southern Steel 45pc share in the venture.
Ann Joo states the termination of MOU is not expected to have any effect on the share capital and shareholders. Also, there will be no material impact on net financials in 2020.
To control the spread of COVID-19, the Malaysian government had imposed strict social distancing measures for almost three months. Mining and steel production too remained shut for around 8-9 weeks. With even steel downstream industries remaining shut, steelmakers found it difficult to boost finished steel sales.
In Malaysia, Ann Joo Resources has an integrated blast furnace with an annual production capacity of 820,000mt while Southern steel through EAF has a capacity of 1.4mn mt per annum.