Malaysia Steel Manufacturer   

SUSTAINABILITY AT MASTEEL

Scope

The scope of 2018 Sustainability Report (“Report”) covers the parent entity, Malaysia Steel Works (KL) Bhd (“Masteel” or “Company”). The subsidiary of the Company namely MS Express Sdn Bhd is not included in the Report as it was founded during the financial year ended (“FYE”) 31 December 2018 and meaningful data collection is still in progress.

Governance

The Board of Directors (“Board”) of Masteel oversees the integration of sustainability principles in its daily operations, including dedication to customers, innovation in steel-making technology and sustainable lifecycle of products. The Board recognises the importance of risks and opportunities associated with the identified material issues and is committed to ensure the adherence by tracking indicators which relevant to each material issue.

The Sustainability Approach

A materiality assessment was conducted to determine the material issues which are most important to Masteel and its stakeholders. A list of economic, environmental, and social material issues relevant to the steel industry was collated based on industry sustainability standards. The issues were prioritised based on importance to the business and stakeholders. Proxies were used to assess importance for stakeholders, which include government, employees, investors, customers and suppliers. The results were mapped on a Materiality Matrix and approved by the Board. Material issues of highest priority discussed in the Report include Customer Welfare, Innovation and Technology and  Lifecycle of Products.

Materiality Matrix

Customer Welfare

The Company places the highest priority to ensure the welfare of its customers are met and exceeded each and every time. There is zero tolerance for the company’s systems and personnel to not comply with the aforementioned ethos. Customer Welfare is the satisfactory provision to our customers in terms of product quality, variety and delivery. The terms of trade must also be perceived by our customers to be of high quality, intuitive and seamless. Further initiatives include making the documentation for customers easier to understand and introducing PREDICTIVE delivery system to ensure the products are ready for delivery even before customers place physical orders.

A current pilot programme to provide preapproved or enhanced credit limits to customers is also being developed. The practise of customers having to face the delivery restrictions and interruptions due to exceeded credit limits will be avoided, as a continuous interactive credit review for customers has been implemented in the credit department.

The initiative to produce more custom-made steel to meet customer preferences is also being implemented.

Customer welfare encompasses the objective of ensuring full customer retention for present and future revenue optimisation as the cornerstone value that permeates all management decisions.

It would be fatal if customer satisfaction is not upheld at all times, as this could result in the loss of sales and diminish the brand prestige and goodwill that could have far reaching implications on the Company.

Factors that could contribute towards a decline in customer satisfaction include product quality, pricing, service standards, compliance issues with contracts and statutory standards. If not adequately and expediently resolved, these issues could cause ramifications that will have a multiplier effect that affects multiple key stakeholders. On rare occasions, the dual effect of potential loss of revenue and libellous monetary claims could be financially overbearing on the Company.

 

Innovation and Technology

Adopting best practice of innovation and technology is essential to Masteel’s operations, as it supports sustainable manufacturing. This is achieved through the following:-

  • Timely adaptation of cost effective technology;
  • Efficient processes that minimize the use of raw materials, energy, spares and generation of by-products and waste; and
  • Reliable technology that can be augmented and upgraded.

The approach of the management team (“Management”) to ensure ongoing improvements in innovation and technology include the following primary areas:-

  • Improvements in plant capacity to recycle and transform waste steel scrap into prime grade steel;
  • Cost reductions in transforming raw materials to finished products; and
  • Adaptation of fourth industrial revolution technologies.

In the past ten (10) years, Masteel has improved the capacity to convert its feedstock to finished goods by approximately 100% while using the same square footage of space. Product yield has maintained in the upper ranges of the global industry benchmarks for steel producers and energy consumed for the recovery and conversion process has been reduced progressively.

Moving forward, the Company and its subsidiaries (“Group”) will strive to further improve its capacity and conversion costs by 20% within the next 5 years. Extensive use of artificial intelligence in its automated processes and secured big data cloud storage will be adopted within the Group.

The consequences of not ensuring continuous improvements in innovation and technology will result in excessive waste in the manufacturing process, which include waste of raw materials, energy, consumables and manpower. Indirect effects include pollution, production of inferior products and negative social impacts. This results in high costs of production and inconsistent product quality.

  

 Lifecycle of Products

Masteel is utilising a combination of steel scrap for its recovery process. This is done by diversifying the blend of steel scrap to include a wider variety of scrap that can be used to create its product. This enhances the ability of the process to utilise recycled waste material to improve conservation capacities.

Masteel’s steel bar product life cycle begins with the usage of steel scrap as the primary inputs to the process. This eliminates contamination of air, soil and the water table by using an electric furnaces to recover, smelt and refine steel scrap into steel bars, which are compliant to international standards and specifications. This includes MS146: 2016, ISO 9001 and Australian Concrete Reinforce Standards. The resulting “New Steel” is used to reinforce the strength of concrete in the construction of buildings and infrastructure such as tunnels and dams. The construction process calls for steel bars to be encased in concrete and thus has zero carbon footprint for at least 50 years.

Masteel’s Research and Development department is currently developing the metallurgical properties of its product to ensure greater durability.

Failure to manage continuous improvements in reducing Masteel’s environmental footprint effectively could result in reduced competitiveness. To mitigate this risk, the Management has employed adaptive strategies to ensure technology advancements that ensure high quality and sustainable products.

 Corporate Social Responsibility

Masteel initiated a new Corporate Social Responsibility (“CSR”) program in 2018 by providing financial education to youths in universities.

It is to support the effort of government and Bursa Malaysia Berhad (“Bursa Malaysia”) to enhance financial literacy and develop investment culture among Malaysians.

The program serves as an investment education platform and is an integral part of Masteel’s CSR initiatives from September 2018 to December 2020.  Ten (10) seminars have been planned for the program in which four (4) seminars will be conducted in Klang Valley and six (6) seminars in other states thoroughout Malaysia, respectively.

The targeted group is the younger generation and focus is to inculcate financial literacy to youths.

The main objectives of the program are to:-

  • Improve the level of financial literacy among participants;
  • Enhance financial knowledge for investors protection (avoid scams) purpose;
  • Impart investment knowledge for wealth building purpose; and
  • Teach participants on financial planning to achieve specific financial goals in different stages of life.

The program targets to reach 120 to 150 university students per session.  Each seminar consists of three (3) hours financial education talk.  Masteel engage the former Vice President of Investor Education Department of Bursa Malaysia, Mr. Warren Mak to be the speaker for the 10 seminars. The Company believes that with his 15 years of experience in Bursa Malaysia will be able to provide useful financial information and valuable investment knowledge to participants.

We are also glad to sponsor free lunch and goodies to participants who attend this CSR program.

In 2018, Masteel conducted two (2) sessions of three (3) hours investor education talks in the following universities:-

  • UCSI University – 13 October 2018; and
  • TAR University College – 2 November 2018.

The Company planned to conduct eight (8) more financial literacy seminars in 2019 and 2020 on a quarterly basis.  By providing proper financial education to the public, Masteel wish to contribute to the development of the younger generations and help to reduce social problem among youths.

The Company believe that financial education is a very important and effective way to help people to build wealth and contribute to the economic growth of the country.