Singaporean lender 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, an intermediate material used for making high-quality steel, is a critical component in low-carbon steel production.

The equity investment in Singapore-based Green Esteel, a company focused on low-carbon steel production and pre-fabrication, is its 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, which seeks to directly invest in green and transition assets and high-growth companies with sustainable innovations.

The approximately US$1.5 billion project, located in Sabah, Malaysia, 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, the bank notes, 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. This makes it, according to the The Net-Zero Tracker Report by the World Economic Forum, 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 with traditional steel production, low-carbon steel production technologies can potentially produce up to 80% lesser carbon emissions.

The low-carbon steel market, according to the Green Steel Industry Report 2025 by Research and Markets, is projected to grow at a compound annual growth rate of 21.4% from 2024, reaching US$19.4 billion by 2029.

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

“With demand for low-carbon steel expected to rise sharply around the world,” adds Gan Kok Kim, OCBC’s head of global investment banking, “we are confident that our equity investment in Esteel offers strong potential for long-term growth returns.”