OCBC’s mezzanine capital unit has made an equity investment in the development of a hot briquetted iron (HBI) plant, which will form part of Southeast Asia’s largest integrated low-carbon steel plant. HBI is a critical component in low-carbon steel production.

The equity investment in Singapore-based Green Esteel Pte Ltd (Esteel), a company focused on low-carbon steel production and pre-fabrication, is Esteel’s first commercial funding provided by a financial institution in Asia. The new plant is scheduled for commissioning by 2030.

This equity investment is extended by the mezzanine capital unit under its sustainability investment programme. The programme seeks to directly invest in green and transition assets and high-growth companies with sustainable innovations.

The approximately SGD 1.97 billion ($1.5 billion) project, located in Sabah, is expected to have an annual production capacity of 2.5 million tonnes of HBI, which can be used to produce approximately the same volume of low-carbon steel.

Steel is a widely used industrial material and is especially integral to the construction, infrastructure, and transportation industries. It is also a vital component of net-zero technologies such as wind turbines, solar panels, and carbon capture systems.

This investment is timely as traditional steel production relies heavily on coal, accounting for approximately 7% of global greenhouse gas emissions. According to The Net-Zero Tracker Report by the World Economic Forum, this makes it the highest-emitting manufacturing sector.

As the global economy accelerates its low-carbon transition, demand for low-carbon steel is expected to grow rapidly. Compared to traditional steel production, low-carbon steel production technologies can potentially produce up to 80% fewer carbon emissions.

According to the Green Steel Industry Report 2025 by Research and Markets, the low-carbon steel market is projected to grow at a CAGR of 21.4% from 2024, reaching SGD 25.53 billion ($19.4 billion) by 2029.

This investment is OCBC’s latest effort to drive decarbonisation of the steel sector, which is one of six sectors for which the bank has set net-zero greenhouse gas emission targets.

Earlier in September, OCBC became the first financial institution to join the Asia Pacific low-carbon steel initiative by the Urban Land Institute (ULI), a global nonprofit organisation promoting sustainable urban development.

The initiative has convened about 30 real estate developers, steel producers, and supporting organisations in Greater China to accelerate low-carbon steel adoption in construction. China is the world’s largest steel-producing and consuming nation with the real estate sector accounting for 30% of its steel consumption.

OCBC’s sustainability investment programme

OCBC’s sustainability investment programme is the first direct investment programme focusing on environmental sustainability by a local bank. It aims to identify and invest in environmental sustainability-focused growth-stage companies, to accelerate their growth and stimulate the development of innovative sustainable solutions.

One key focus is on green and transition assets and infrastructure across sectors such as renewable energy, energy management, transportation, real estate, and technology. Companies advancing environmentally sustainable solutions – such as those related to the circular economy, sustainable food and water systems, and energy transition strategies – are another area of interest.

Gan Kok Kim, head of global investment banking at OCBC, said: “With demand for low-carbon steel expected to rise sharply around the world, we are confident that our equity investment in Esteel offers strong potential for long-term growth returns. This marks a strategic milestone for OCBC as we build up our sustainable investment capabilities under the sustainability investment programme. We are proud to support the transition to a greener, low-carbon economy.”

Gong Hong, CEO of Green Esteel, said: “We are grateful for the support of OCBC, whose investment marks a pivotal moment in our journey towards a low-carbon future. This partnership not only accelerates the implementation of our transition strategy, but also reinforces our shared commitment to sustainable industrial transformation. Together, we are laying the foundation for a greener, more resilient steel industry.”

Re-disseminated by The Asian Banker