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The announcement was made on Monday December 15 in a filing with Bursa Malaysia, the country’s stock exchange, in response to a news article published by the New Straits Times saying the company would cease operations and lay off all its 1,500 employees by the end of this month.
Perwaja Steel has in fact ceased all material operations since August 2013 when its dry gas and electricity supplies were curtailed, Perwaja Holdings said in the filing.
“Given the cessation of operations, Perwaja Steel intends to undertake a company-wide retrenchment programme for its employees,” it pointed out.
As of December 15, Perwaja Steel had about 1,000 employees, not 1,500 as stated by the Malaysian news publication, Perwaja Holdings clarified.
“All the employees have been informed on the proposed retrenchment programme, and Perwaja Steel is currently undertaking a consultation process with the employees via their appointed representatives,” it said.
Perwaja Holdings did not disclose any time frame for the programme and said its financial impact on the whole group will only be determined upon finalisation of the terms.
Financial woes
Based in Kemaman in the Malaysian state of Terengganu, Perwaja Steel can produce as much as 1.5 million tpy of direct-reduced iron and 1.3 million tpy of semi-finished steel such as billet and bloom.
News that the company had ceased operations at its steel meltshop and direct-reduced iron plant were confirmed to Steel First early in January this year.
The company has for over a year been working out a restructuring scheme with its financial lenders and major creditors, as well with Malaysian authorities.
In its latest annual report, filed three weeks ago with Bursa Malaysia, Perwaja Holdings said it was still hoping for a turnaround and to be transformed into an integrated upstream steel producer despite its financial woes.
Eastern Steel
Meanwhile, state-owned news agency Bernama reported said that the Terengganu state government has requested Eastern Steel to employ the workers laid off by Perwaja Steel.
Eastern Steel, a joint venture between China’s Shougang Group and Malaysia’s Hiap Teck Venture Berhad, is building a 1.5-million-tpy integrated steel mill in Kemaman, which is expected to come on stream next year.
