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Allow me to provide some background on Perwaja for your readers.

The Perwaja steel mill was started with two major components; (a) the direct reduction plant to produce DRI (direct reduction iron) and (b) the electric-arc furnace to make steel billets.

For Malaysia to be a steel producer from iron ore, unlike the small mills that were already producing steel from scrap iron at that time, it was recommended by experts, that Malaysia should choose the direct reduction approach rather than the introduction of blast furnaces which demanded higher investment cost.

Furthermore, the nation's steel requirement at that time did not justify a minimum economic quantity blast furnace plant. Another added factor to favour the direct reduction route at the time was the availability of gas supply at reasonable cost - a price which Petronas grudgingly accepted.

At the time when Perwaja was conceived and implemented, there were only two manufactures who could supply plants which could produce DRI within certain economic parameters that would be able to compete with steel produced via the blast furnace method because of the inherent requirement for higher grade ore and pallets for the production of DRI.

All the above explanation is necessary to understand why Perwaja was not projected to make profit in the initial years. There were two other factors which made Perwaja such a sad story - even before the Eric Chia enigma started.

When tender for the supply and construction of the steel mill was called, a third party also submitted its offer. This party had only an experimental DRI plant in their country, but being a global player in the steel business, they were so confident in the technology that they not only offered the lowest price but also a money-back guarantee if they could not meet the specified performance parameters.

A fateful decision was made by the tender board to accept them.

When they failed, they paid like a Duke. Perwaja however lost valuable time, and time in business meant money under the bridge. They were also given reasonable extension to achieve the performance parameters, such as the consumption of gas to produce a ton of DRI with the required mineralisations but failed they did.

The other unfortunate factor for Perwaja was when they were having trouble producing the right quality DRI to produce billets which was supposed to take the place of imported steel scraps, then existing mills were also happily importing billets from the international market in anticipation of some form of 'protection' import duty by the government to help Perwaja.

So when Perwaja was ready to supply the billets, the market was almost dry. It was indeed a double whammy.

With a change over in management, which also resulted in the Heavy Industries Corporation of Malaysia (Hicom) handing over its equity in Perwaja to the Minister of Finance Incorporated 10 years ago, it is not possible to ascertain exactly how much was the actual loss suffered by Perwaja.

The history of our industrialisation process should be accurately recorded and preserved for our future generations so that they can learn from our mistakes and failures. It is a pity that our academics do not seem to devote their time to this areas.

It is also undesirable that those who have personal knowledge of these important milestones in our history should keep mum when fallacies are brazenly displayed.

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