Chief minister Hajiji Noor said the ban would be lifted once a mechanism has been formulated for the imposition of the RM200 per metric tonne state sales tax on scrap iron exports.
However, exports of scrap metals like copper and aluminium, and precious metals such as platinum, gold, titanium and stainless steel are exempt from the ban, he said.
Hajiji added that the state Cabinet made the decision in light of the acute shortage of raw material for steel billet and rebar production in Sabah.
He said that with raw material readily available, it would see a bigger production of billets and rebars. This in turn would stabilise the market price, which at the moment is high and has made construction costs in Sabah exorbitant.
“The steel industry contributes significantly to Sabah’s economy, currently providing for 500 jobs with an average monthly wage of RM2,000 per worker,” Hajiji said in a statement here today.
“Therefore, if our steel industry ceases operations, the state’s unemployment rate will rise. This will create a very negative impact on our economy, more so now during the pandemic.”
According to Hajiji, a sufficient supply of raw material would stimulate investment expansion and push production capacity from 8,000 tonnes to 18,000 tonnes per month.
It will also allow the existing steel billet mills to expand operations into wire rod production, which will require a total investment of about RM40 million, he added.
Local billet mill operators were also planning to reinvest by building another mill in the Sabah east coast at an estimated cost of RM20 million.
“This additional RM60 million in investment will provide more job opportunities for about 400 people in Sabah,” Hajiji said.
Due to the scarcity of scrap iron and the absence of steel mines in Sabah, he said it was critical that sufficient quantity of the ferrous metal or scrap iron be retained in the state for value-added purposes.
He said the temporary ban is also in line with Sabah’s industrial policy in line with the Sabah Maju Jaya development plan to stimulate high value-added downstream processing activities.