ENVIRONMENTAL
Air Emissions
Masteel recognises air emissions as a material environmental aspect of steel manufacturing and therefore implements a structured air quality management approach to ensure compliance with the Malaysian Environmental Quality (Clean Air) Regulations 2014 enforced by the DOE. Continuous monitoring and preventive control measures are applied to minimise environmental impact and manage operational risks associated with atmospheric emissions. Since 2021, Masteel has deployed a Continuous Emissions Monitoring System (CEMS) to measure and record emission parameters in real time. The CEMS comprises strategically positioned analysers installed across key emission points to continuously measure and record air emission parameters. The system provides accurate and reliable operational data that supports ongoing environmental monitoring and performance verification.
Real-time monitoring enables early detection of abnormal readings or equipment irregularities, allowing timely corrective actions to be implemented to reduceenvironmental impact and operational risk. The monitoring framework also supports consistent compliance by ensuring emissions remain within permissible regulatory limits while providing data for operational optimisation and preventive maintenance activities
Over the past four years, all monitored emission parameters have remained within regulatory limits and zero air emission-related penalties were recorded. This demonstrates the effectiveness of the monitoring and control framework implemented across operations. Beyond regulatory compliance, Masteel adopts a continuous improvement approach to air emissions management through process optimisation, preventive operational controls and enhancement of monitoring capabilities. Operational parameters are periodically reviewed to minimise particulate generation and gaseous emissions at source. Preventive maintenance programmes and equipment performance inspections are also conducted to ensure pollution control systems operate at optimal efficiency and avoid abnormal emission events.
Data generated from the CEMS is analysed to identify performance trends, enabling operational adjustments and targeted corrective actions where necessary. This datadriven approach supports early intervention, improves operational reliability and reduces the likelihood of exceedances. In parallel, employee awareness and operational procedures are reinforced to ensure consistent adherence to emission control practices. Collectively, these measures strengthen environmental risk management while maintaining stable production performance. Through ongoing monitoring, operational refinement and preventive controls, Masteel seeks to progressively reduce atmospheric impact and maintain responsible industrial operations in line with our environmental management objectives.
GHG Emissions
Masteel remains committed to transparent and comprehensive greenhouse gas (“GHG”) reporting, encompassing Scope 1, Scope 2 and Scope 3 emissions for FY2025. To strengthen credibility and data reliability, Masteel continues to engage independent third-party assurance providers to verify our carbon footprint disclosures. Our reporting approach aligns with the requirements of the IFRS S2 Climate-related Disclosures and is supported by internationally recognised climate frameworks, including the Paris Climate Agreement (2015) and the United Nations sustainability agenda.
Climate change presents both risks and opportunities that directly influence Masteel’s long-term resilience, operational efficiency and market competitiveness. As a steel manufacturer operating energy-intensive processes, Masteel is inherently exposed to evolving environmental regulations, stakeholder expectations and global decarbonisation trends. The accelerating transition towards a low-carbon economy is reshaping the steel industry, with governments introducing carbon pricing mechanisms such as the Carbon Border Adjustment Mechanism (“CBAM”) and investors increasingly requiring robust climate-related disclosures. Failure to adapt may lead to higher compliance costs, restricted market access and reputational risks.
Conversely, proactive climate action provides Masteel with the opportunity to advance green steel initiatives, attract sustainability-focused investors and respond to growing demand for low-carbon materials within the infrastructure and construction sectors. By embedding climate considerations into our business strategy, we aim to future-proof operations, improve resource efficiency and deliver long-term value to stakeholders.
Scope 1 Emissions Management
Masteel’s Scope 1 emissions primarily originate from direct operational activities, particularly the combustion of natural gas and diesel used in manufacturing processes. These emissions are systematically monitored and reported to enhance operational efficiency and minimise environmental impact. Since FY2023, the Group has adopted the ISO 14064 standard to ensure accurate, consistent and standardised carbon accounting.
To further support decarbonisation, Masteel has implemented technological upgrades to reduce electricity and fuel consumption while continuously exploring alternative fuels and process optimisation initiatives to lower overall emissions intensity.
Scope 2 Emissions Management
Scope 2 emissions arise from purchased electricity consumed in our operations. Masteel continues to prioritise reductions in indirect energy emissions through structured energy management and efficiency improvement initiatives. Key measures implemented include optimising electricity consumption by directly charging billets from the Continuous Casting Machine (“CCM”) to minimise reheating energy requirements, thereby reducing overall electricity demand. Masteel is also advancing renewable energy adoption, with solar photovoltaic installations forming an integral part of our sustainability roadmap. In addition, Masteel has implemented the ISO 50001:2018 Energy Management System to ensure systematic monitoring, performance evaluation and continuous improvement in energy efficiency. Through these initiatives, we aim to lower carbon intensity while improving operational performance and cost efficiency.
Scope 3 Emissions Management
Scope 3 emissions represent indirect emissions occurring across Masteel’s value chain and are inherently more complex to measure due to their occurrence outside the Group’s direct operational control. Recognising the importance of value chain transparency, Masteel has established a structured approach to tracking and reporting material Scope 3 emission sources. The Group currently monitors and discloses five key categories, namely Category 6: Business Travel, Category 7: Employee Commuting, Category 8: Upstream Leased Assets, Category 9: Downstream Transportation and Distribution, and Category 13: Downstream Leased Assets. This approach strengthens accountability, enhances data visibility and supports ongoing efforts to identify emission reduction opportunities beyond direct operations.
Masteel’s FY2025 GHG emissions performance at the Bukit Raja plant reflects ongoing progress in managing climate-related risks and improving emissions intensity. The steelmaking plant recorded a process carbon intensity of 0.456 tCO₂e/mt, while the rolling mill plant achieved 0.085 tCO₂e/mt. These improvements were supported byoperational optimisation measures, energy efficiency initiatives and the adoption of more sustainable manufacturing practices.
The Group has established interim decarbonisation targets comprising a 10% reduction in GHG emissions by 2026 and achieving net zero by 2030. These targets form part of Masteel’s broader climate transition pathway and are incorporated into operational planning and performance monitoring to manage exposure to evolving regulatory requirements, carbon pricing mechanisms and market expectations. Further details on Scope 1, Scope 2 and Scope 3 emissions, including methodologies, and carbon reduction strategies, are disclosed on page 157-160 of the IFRS S1 & S2 disclosures. These disclosures support stakeholders’ assessment of Masteel’s climaterelated risks, opportunities and transition strategy in accordance with IFRS S2 requirements.
