LION Group said it will invest some RM5 billion (US$1.32 billion) over the next three to five years to expand and upgrade its steel business.

Lion Group chairman and chief executive officer Tan Sri William Cheng Heng Jem said the company will use its own funds and issue bonds to finance the investment.

Essentially, Lion seeks to increase its capacity, improve productivity and efficiency and reduce costs in its steel division.

The new investment will also enable the group to produce higher grade steel to support downstream industries and promote higher value-added manufacturing activities.

“The Lion Group steel division is committed to work with the downstream manufacturers to develop the steel industry and expand the consumption of Malaysian-produced steel through the development of new products and new processes and through exports,” he said after the opening ceremony of Wisma Lion, Amsteel Mills II and Megasteel’s Cold Rolling Mill in Banting, Selangor, yesterday.

“We are also determined to make our steel division one of the most efficient, low-cost and high-quality steel producers and help the country achieve industrialized status under vision 2020,” Cheng said.

So far, Lion has embarked on several new projects aimed at improving its steel division.

They include construction of a new RM250 million Banting bridge and building a new RM1 billion Direct Reduced Iron (DRI) plant using iron ore and natural gas to produce DRI – a high purity feedstock for steel making.

The bridge is expected to save the group RM77 million a year on transportation while the new DRI plant could help reduce annual production cost by RM245 million.

Lion is also looking at several more new projects that will contribute towards reducing production cost such as the RM1.2 billion blast furnace project and the RM1.6 billion dedicated power plant — powered by waste gas and natural gas — that will cut annual production cost by RM240 million.

“The implementation of all these new projects will help us achieve our target to be among the top 10 per cent of most efficient steel producers in the world. And we are hoping to achieve this target within five years,” Cheng said.