Malaysia blast furnaces in limbo as government stops mining activities on coronavirus

Mining activities in the Malaysian states of Terengganu, Pahang and Johor have been halted following the government's announcement Monday of a suspension to all non-essential activities in the country.

The temporary suspension will be in effect for a period of 14 days over March 18-31, the state-run Department of Mineral and Geoscience of Malaysia told S&P Global Platts Tuesday.

"This is trouble, and we have no choice now," a blast furnace steelmaker on the eastern side of Malaysia's main island said. "Producers here rely on about 30-40% of local iron ore use, purchased in mainly just-in-time deliveries, and without this we cannot blend the ores in the sinter."

A blast furnace steelmaker said switching off the furnace for just a short period would be too costly in terms of restarting, so the company is planning to continue to burn through its coal supplies during the 14-day period in order to maintain the base temperature of the blast furnace without having to turn it off entirely.

"The quality of local iron ore might not be comparable to Australian or Brazilian ones," the source said. "But without it we are unable to make our own blends, and within this short period of notice there's no way of changing the blends or getting more imports by Wednesday."

Alliance Steel and Eastern Steel, located in Pahang and Terengganu state respectively, have annual production capacities of 3.5 million mt and 0.7 million mt respectively, with estimated annual iron ore consumption basis on full utilization at 5.6 million mt and 1.1 million mt, Platts data showed.

(Corrects location of Alliance Steel to Pahang in last sentence)