PETALING JAYA: PN17 company Kinsteel Bhd’s wholly-owned subsidiary Kin Kee Steel Service Centre Sdn Bhd (KKSSC) has entered into a letter of intent (LOI) with China’s Tianjin Qiangbang Industrial Co Ltd (Qiangbang) for the proposed formation of a joint venture company (JVC) to operate a steel plant in Kedah.
The JVC’s shareholding will consists of Qiangbang (40%), KKSSC (45%) and a local Malaysian party to be subsequently identified (15%).
The plant is to produce core products of billet, wire rod, spring steel flat bar and laminated leaf spring. It will have an installed capacity of 500,000 metric tonne per year, targeted to commence operations in March 2021.
Qiangbang is principally engaged in business or trades of steel smelting, rolling and making.
KKSSC was previously involved in the manufacturing and trading of wire mesh. The company had ceased operations in December 2017 and is currently dormant.
“The LOI has been entered into, to set out the mutual understanding of the parties of their respective roles for the time being pending the negotiation and execution of the joint venture agreement in respect of certain terms and conditions,“ Kinsteel said in a stock exchange filing today.
The company believes that the collaboration will allow the parties to combine their operating capabilities and experience in the production of the core products and enable the company to create additional income stream to enhance the group’s business growth and shareholders’ value; and
expand its product lines into spring steel flat bar and laminated leaf spring.
The exercise is expected to contribute positively to the future earnings and improve the financial position of the company once the JVC commences commercial production.