Thai steel manufacturers G Steel and GJ Steel are seeking investment incentives from the Board of Investment (BoI) to support a development worth 4.5 billion baht that aims to address the pressing challenges faced in the local steel market while producing fewer carbon dioxide emissions.
Somsak Leeswadtrakul, the founder and honorary chairman of G Steel and GJ Steel, was contacted by the Bangkok Post and advised both companies are operating at low production capacity despite employing more than 1,000 employees. He attributed the low capacity to the dumping of low-quality, cheap foreign steel in the Thai market.
Mr Somsak said if the government deals with the dumping issue, the two firms have advanced steel plants with state-of-the-art machinery, which would allow for the expansion of their production capacity as well as the substitution of a large portion of imported steel.
According to the BoI, the companies' new manufacturing development plan, which is expected to cover a period of three years, is aimed at improving the production processes for manufacturing hot-rolled sheets.
G Steel will enhance production technology at its Rayong plant through the use of a 3-billion-baht budget while GJ Steel will spend 1.5 billion baht upgrading machinery at its factory in Chon Buri.
They will also better manage raw materials produced from recycled steel to support their manufacturing.
"This will support the country's circular economic development and the state's efforts to achieve carbon neutrality," said Narit Therdsteerasukdi, secretary-general of the BoI.
G Steel and GJ Steel are already familiar with eco-friendly steel manufacturing. They are the only companies in Thailand to have adopted electric arc furnace (EAF) technology, which promises to ensure a lower level of carbon dioxide emissions.
EAF technology allows steel manufacturers to return scrap for resmelting.
G Steel and GJ Steel are also the largest steel recycling companies.
Both companies are subsidiaries of Japan's Nippon Steel Corporation, the world's fourth largest steelmaker.
Nippon Steel would be able to enhance the efficiency and quality of the two factories to make them the top steel producers in Southeast Asia, said Mr Somsak.
"It is good for both companies to have Nippon Steel as their partner but the issue of low-quality steel being dumped into the Thai market must be appropriately taken care of," he said.
"We hope the government will address this issue seriously as the steel industry is a vital fundamental for the country's industries. It has the potential to replace imports and save the nation hundreds of billions of baht in foreign exchange annually."
Establishing its business in Thailand some 60 years ago, Nippon Steel currently has more than 30 subsidiaries and employs 8,000 people. It decided to invest 40 billion baht in G Steel and GJ Steel in 2022 to strengthen its position in the local steel industry, which comprises 180 steel manufactures.
"G Steel and GJ Steel are going to level up steel production in Thailand, paving the way for low-carbon manufacturing which is crucial for international trade, particularly trade with the European Union," said Mr Narit.
According to the BoI, Thailand has the highest steel consumption per capita in Asean, with an annual rate of 234 kilogrammes per person.
Up to 60% of steel products are used in construction work, followed by car and car parts (20%), electrical appliances and electronics (7%), machinery (5%), packaging (5%) and others (3%).