National Iron and Steel Mills (NatSteel)

National Iron and Steel Mills (NISM) was set up in 1961 as part of Singapore’s development plans. It was the first factory to be built in Jurong Industrial Estate in the 1960s and started by supplying steel to Singapore’s construction industry. It began exporting its steel products in the 1970s as it expanded.

The NISM Group started exploring diversification in the 1980s and changed its name to NatSteel to reflect this corporate direction. By the end of the 1990s, companies under NatSteel’s Electronics Division had become major manufacturers of computer components. The new millennium saw a takeover bid in 2002 that ended with Ong Beng Seng’s 98 Holdings consortium taking control of the NISM Group. This was followed by Tata Steel’s purchase of NatSteel’s steel business in 2004 after which NatSteel renamed itself as NSL while Tata Steel retained the NatSteel name.

The first steel mill

In 1956, a group of businessmen from Hong Kong started the Singapore Steel and Iron Mills Ltd.1 Situated at Bukit Timah Road 13½ mile, it was the first factory in the region to roll steel products out from scrap.2 Using local scrap iron supplies, it hot-rolled about 300 tonnes of steel bars a month for the local construction industry.3 This company failed in 1962 but was restarted by a fresh group of investors in 1963 as Malayan Iron and Steel Mills Ltd. with an authorised capital of $2 million.4

Steel mill for Jurong Industrial Estate

The first public mention of the possibility of Singapore starting a major iron and steel mill was by then Prime Minister Lee Kuan Yew on his return from a state visit to Indonesia in January 1960.5 Indonesia was interested in supplying the coal for such a mill while Malaysia had a ready supply of iron ore that it was exporting to Japan.6 Singapore requested for a loan of $600 million from the World Bank and also for support from Japanese industrialists.7

In March 1960, the United Nations Technical Assistance Board agreed to send two teams when Singapore asked for assistance in its industrialisation programme: one to specifically report on the feasibility of setting up an iron and steel mill, and the other to look into the industries that Singapore could successfully attract investment in.8 The iron and steel industry expert, Philippe Schereschewsky, arrived in August to do preliminary groundwork ahead of his team, while the second team studying other industries led by Albert Winsemius arrived in October.9 Schereschewsky’s team arrived in February 1961 and their report was completed and submitted by June that year.10

As it turned out, financing came from two business groups: Goh Tjoei Kok’s Tat Lee Group and Soon Peng Yam’s Sim Lim Group.11 Both had applied to set up small steel mills in Singapore and the then chairman of the Economic Development Board (EDB) Hon Sui Sen persuaded them to combine their investments to start one large mill in Jurong.12 The EDB took a 20 percent stake in the venture while the Tat Lee and Sim Lim Groups each took 40 percent of what was projected to be a $50 million plant producing between 30,000 to 50,000 tonnes a year from scrap metal and steel ingots.13 NISM was set up on 12 August 1961 but this allotment of shares in the company was only formalised on 8 December 1961 with the first commitment of funds being $6.25 million.14 This was quickly followed by the award of a Pioneer Certificate on 14 February 1962 which gave NISM a tax free status for five years.15 However, disagreements between the two groups of investors occurred and the Sim Lim side subsequently divested.16 Tan Keong Choon bought over the shares of Soon Peng Yam and some others, and became joint managing director with Goh Siong Pek.17 In 1964, National Iron and Steel Mills was floated with the issue of two million shares to the public bringing the fully paid up capitalisation to $12 million.18

Building the mill

The plans for a new industrial town in Jurong were announced on 3 July 1960 with the proposed iron and steel plant acting as “the core of the medium and heavy industry centre”.19 The construction of a highway to town and other ground preparations took place until 16 September 1962 when then Minister of Finance Goh Keng Swee (Dr) laid the foundation stone for NISM, the first factory in Jurong.20 The meltshop began the production of steel ingots on 2 August 1963 and Goh officially opened the mill on 31 January 1964 after the completion of the rolling plants in December 1963.21 At the same time, Eastern Shipbreaking was acquired by the company and renamed National Shipbreaking in order to ensure a supply of scrap metal for the mill. It also started Eastern Industries, which recovered tin plating from discarded metal containers; the de-tinned iron containers also fed the mill.22

Growth

From 1964 to 1969, production grew from 48 thousand tonnes to 132 thousand tonnes.23 The price NISM sold at was also $100/tonne cheaper than international prices, yet it could report a healthy profit and dividends: a $8.55 million trading profit in 1969 with a proposed final dividend of 7.5 percent.24 With Singapore’s construction industry booming and world demand for steel exceeding supply, NISM was in a strong position and expanding.25 Even when restrictions on steel imports that protected Singapore’s steel industry ended in May 1973, NISM’s prices were still significantly lower than world prices.26

NISM was fed by scrap from local and overseas sources and eventually steel from foreign mills as well.27 Shipbreaking never did become a significant source of scrap despite it being identified as a potential industry and other shipbreaking nations for example, Taiwan, grew to dominate the world of shipbreaking.28 The dream of an integrated mill that imported and refined iron ore, then produced finished steel products never did materialise though there were several attempts made over the years.29 In the early years, the demand for steel from Singapore’s construction industry absorbed NISM’s output, but after the lifting of import restrictions in 1973 exports expanded until it reached 38 percent of all tonnage sold in 1989, the year before they were renamed NatSteel.30

Diversification and renaming to NatSteel

Even though their steel production and sales were still expanding, NISM had already started looking into diversifying into high tech sectors with the establishment of Singacon Investments in 1981.31 However, the Group’s profits before taxation were relatively stagnant during this period, hovering just below $50 million per year despite the rolling mill output rising from 318 thousand metric tonnes in 1978 to 525 thousand metric tonnes in 1982.32 Among the early investments was a joint venture with other local companies, National Oxygen, to produce industrial gases.33 Another early investment was with Finnish company Partek to produce prefabricated concrete parts for quicker construction.34 The maturing of Singapore’s construction sector in the mid-1980s and the difficulties of the world steel market quickened the pace for corporate diversification.35 The Raffles Marina venture with Trans-Island Bus Services, DBS Land and Jurong Town Corporation in 1989 would be one of the most unusual diversification directions for NISM who held the 65 percent majority stake through its subsidiary, NatSteel Resorts.36 As a sign of its diverse business interests, National Iron and Steel Mills changed its name to NatSteel in May 1990.37

The growing computer industry was a major sector into which NISM expanded. One of NISM’s purchases in 1989, Sino-Technic grew into a major contract manufacturer for the computer industry by 1997 when it became a listed company as NatSteel Electronics.38 Other acquisitions that became major parts of its electronics empire was disk drive parts maker BJ Industries in 1990 and injection moulded plastic parts maker Broadway in 1992.39 NatSteel Broadway was listed on the Singapore Stock Exchange in 1996.40 By 1997, NatSteel’s Electronics Division, of which these three companies were a part, was responsible for more than half the Group’s profits before tax.41

Takeover bid

On 3 June 2002, the president of NatSteel, Ang Kong Hua, together with other senior managers, proposed a buyout of NatSteel. They proposed the sale of NatSteel Broadway and NatSteel Brasil for which they had found buyers, while their own investment firm, Crown Central Assets Pte Ltd, would purchase the other assets of NatSteel including the NatSteel name for $294 million. The original company itself would then be dissolved and the cash from these sales excluding outstanding debts would be distributed to shareholders. Shareholders stood to gain up to $1.84 per share. While valuation of NatSteel’s assets was around $3 a share, the global steel industry then was in a downturn and other steel producers were being traded at half their asset value.42

Ong Beng Seng then led a consortium, 98 Holdings, to propose a counteroffer of $1.93 a share on 3 October. This was followed quickly by Oei Hong Leong who purchased 40.6 million shares between 9 and 11 October but did not launch a takeover bid. Ang’s group subsequently threw their support behind 98 Holdings and by the takeover attempt deadline of 10 January 2003, 98 Holdings had managed to acquire 50.31 percent of the shares at $2.06 per share. Oei, on the other hand, purchased stock just below the 30 percent mark, the point at which he would have had to officially declare if he was going to make a takeover bid on NatSteel. As a result, 98 Holdings took control of NatSteel while Oei became the second largest shareholder. If 98 Holdings had failed, they would not have been allowed to attempt another takeover bid for a year.43

During this corporate battle, the sale of NatSteel Broadway and NatSteel Brasil proceeded as originally planned. Flextronics purchased NatSteel Broadway in July 2002 for $653 million while NatSteel Brasil was sold to Gerdau Participacoes and Gerdau GTL Spain in October 2002 for $254 million.44 Nett proceeds of the sale were distributed with dividends totalling $1 per share announced in March 2003.45

Tata Steel purchase and NatSteel becomes NSL

The following year in August 2004, Tata Steel, India’s largest steel manufacturer, made an offer to buy NatSteel’s steel business and name.46 This was approved by the shareholders and NatSteel’s steel-making operations were separated from the company under the name NatSteel Asia and sold to Tata Steel.47 After these divestments, the company still had significant operations in its chemicals, engineering and construction products groups.48 Unable to find suitable new investments, NatSteel distributed special dividends of $1.07 per share in November 2005 on top of the annual dividend of 60 cents per share announced in September.49 There was another special interim dividend of 20 cents per share announced in September 2006.50

NatSteel failed several times to rename itself NSL as name changes required 75 percent of shareholders’ consent and Oei always used his 30 percent shares to block any attempts.51 Only after Oei sold his more than 112 million shares to 98 Holdings for $192.8 million in July 2008 did the name change go through at an Extraordinary General Meeting of shareholders in October that same year.52

Timeline
1961
: National Iron and Steel Mills (NISM) is founded by two groups of investors with EDB.
1962
: Construction of NISM’s first steel mill begins, the first factory of Jurong Industrial Estate. NISM is awarded pioneer status.
1963
: NISM starts producing steel products.
1968
: NISM’s tax-exemption pioneer status expires.
1973
: Singapore steel import restrictions cease.
1989
: NISM purchases Sino-Technic.
1990
: NISM is renamed NatSteel.
1992
: NatSteel purchases Broadway.
1996
: NatSteel Broadway listed on the Singapore Stock Exchange (SES).
1997
: NatSteel Electronics (former Sino-Technic) listed on SES.
2002
: Management team makes a takeover attempt leading to a takeover battle with Ong Beng Seng’s 98 Holdings consortium and Oei Hong Leong. 98 Holdings wins and takes control of NatSteel.
2004
: Tata Steel purchases NatSteel’s steel business, naming it NatSteel Asia.
2008
: NatSteel renames itself NSL.



Author

Timothy Pwee



References
1. “Colony Steel Mill Begins Output,” Singapore Tiger Standard, 31 August 1956, 10. (From NewspaperSG)
2. “Colony Steel Mill Begins Output.”
3. “S’pore Steel Mill Aids Building,” Singapore Tiger Standard, 9 January 1957, 10. (From NewspaperSG)
4. “New Steel Mill Starts in Singapore,” Straits Times, 12 February 1963, 14. (From NewspaperSG)
5. “Steel Plan Is Hailed,” Straits Times, 28 January 1960, 1. (From NewspaperSG)
6. “Steel Plan Is Hailed.”
7. “Steel Plan Is Hailed.”
8. “That Steel Mill: U.N. to Be Asked to Send Survey Team to Singapore,” Straits Times, 31 March 1960, 7. (From NewspaperSG)
9. “No Reason for Pessimism in Singapore: U.N. Expert,” Straits Times, 30 August 1960, 5; “UN experts to Help S’pore,” Straits Times, 4 October 1960, 2. (From NewspaperSG)
10. “New UN Team Due for Steel Survey,” Straits Times, 8 February 1961, 20; Conrad Chiew, “UN Pledge to Singapore,” Singapore Free Press, 24 June 1961, 1. (From NewspaperSG)
11. “$50M. Singapore Steel Company,” Straits Times, 16 December 1961, 25 (From NewspaperSG); Tan I Tong, oral history interview by Jesley Chua Chee Huan, 7 September 1999, transcript and MP3 audio, 30:26, National Archives of Singapore (accession no. 002198), 36.
12. Tan I Tong, oral history interview, 7 September 1999, 34–36.
13. Poteik Chia, “Steel for Malaysia and Lands Beyond,” Straits Times, 16 September 1962, 1. (From NewspaperSG)
14. “$50M. Singapore Steel Company.”
15. “A ‘Plague’ on the Economy,” Straits Times, 15 February 1962, 16. (From NewspaperSG)
16. Soon Peng Yam, oral history interview by Lim How Seng, 13 October 1981, transcript and MP3 audio, 28:32, National Archives of Singapore (accession no. 000012), 46–47.
17. Tan Keong Choon, oral history interview by Lim How Seng, 20 September 1981, transcript and MP3 audio, 29:59, National Archives of Singapore (accession no. 000052), 83; Tan Keong Choon, oral history interview by Lim How Seng, 20 September 1981, transcript and MP3 audio, 29:34, National Archives of Singapore (accession no. 000052), 84; “Directors of the Mills,” Straits Times, 31 January 1964, 17. (From NewspaperSG)
18. “Balloting for Steel Mill Shares,” (1964, June 2). Straits Times, 2 June 1964, 11; “National Iron and Steel Mills Limited,” Straits Times, 23 May 1964, 6. (From NewspaperSG)
19. “$45M. Industrial Town Plan for S’pore,” Straits Times, 4 July 1960, 12. (From NewspaperSG)
20. “Start on the Road to the Jurong Complex,” Straits Times, 6 October 1961, 9; “$2 Million Contract to Prepare Site for Industry,” Singapore Free Press, 7 February 1962, 7; “Goh’s Warning,” Straits Times, 17 September 1962, 1. (From NewspaperSG)
21. “Goh Starts First Steel Mill in Production,” Straits Times, 3 August 1963, 4; “National Iron and Steel Mills Ltd.: Official Opening,” Straits Times, 31 January 1964, 13. (From NewspaperSG)
22. “3 National Iron Ancillary Units Now Operating,” Straits Times, 1 November 1963, 12. (From NewspaperSG)
23. National Iron and Steel Mills Ltd, Directors Report and Statement of Accounts for the Year Ended 31st December 1969 (Singapore: National Iron and Steel Mills, 1970), 6, 8. (Call no. RCLOS 691.7 NISMDR)
24. National Iron and Steel Mills Ltd, Directors Report and Statement of Accounts, 4.
25. National Iron and Steel Mills Ltd, Directors Report and Statement of Accounts, 4–6.
26. “Contractors Study Steel Bars Supply Position,” Straits Times, 27 May 1973, 6. (From NewspaperSG)
27. Austin Morais, “S’pore Gets First US Steel Scrap Shipment,” Straits Times, 19 July 1972, 15; Bibiana Choo, “Shortages May Stem NISM’s Profit Rise,” Business Times, 6 June 1980, 11 (From NewspaperSG); National Iron & Steel Mills, Annual Report 1978 (Singapore: National Iron and Steel Mills Ltd, 1979), 7. (Call no. RCLOS 691.7 NISMDR)
28. “Shipbreaking a Profitable Industry Here,” Straits Times, 16 September 1962, 3; Rahim Kassim, “Shipbreaking Is Heartbreaking,” Business Times, 12 January 1979, 13; “Local Shipbreaking Firms Face Bad Times,” New Nation, 11 August 1972, 12. (From NewspaperSG)
29. “Go Ahead Sought for $240 M Steel Mill in Singapore,” Straits Times, 9 June 1970, 2; Ronnie Lim, “No Decision Yet on Steel Industry,” Business Times, 2 October 1980, 1; Chuang Peck Ming, “Singapore Proves Its Iron Mettle,” Business Times, 26 April 2007, 12. (From NewspaperSG)
30. National Iron & Steel Mills, Annual Report 1989 (Singapore: National Iron and Steel Mills Ltd, 1990), 4–5. (Call no. RCLOS 691.7 NISMDR)
31. Mano Sabnani and Chris Lim, “National Iron to Ttransform Itself into a High Tech Group,” Business Times, 1 October 1982, 1 (From NewspaperSG); National Iron & Steel Mills, Annual Report 1979 (Singapore: National Iron and Steel Mills Ltd, 1980), 11. (Call no. RCLOS 691.7 NISMDR)
32. National Iron & Steel Mills, Annual Report 1978, 7; National Iron & Steel Mills, Annual Report 1982 (Singapore: National Iron and Steel Mills Ltd, 1983), 10, 16. (Call no. RCLOS 691.7 NISMDR)
33. “The Watershed Years,” Business Times, 1 October 1982, 6 (From NewspaperSG); National Iron & Steel Mills, Annual Report 1982, 10.
34. “National Iron and Steel Mills,” Business Times, 1 October 1982, 6; Brendan Pereira, “Pre-Fab Houses Built in Shorter Time,” Straits Times, 8 February 1988, 2. (From NewspaperSG)
35. John Lim, “NISM Inaugurates $45M Wire and Steel Rolling Mill,” Business Times, 21 July 1984, 12. (From NewspaperSG)
36. Yong Pow Ang, “Nat Iron Teams Up with Three Others for Marina Project,” Business Times, 13 February 1990, 1; Edmund Loh, “Nat Iron Keen On Chain of Marine-Based Resorts,” Straits Times, 24 March 1990, 39. (From NewspaperSG)
37. “New Name and Logo for Nat Iron,” Straits Times, 8 May 1990, 39 (From NewspaperSG); National Iron & Steel Mills, Annual Report 1989, 1, 5.
38. “National Iron Buys 94% Stake in Electronics Firm,” Straits Times, 13 January 1989, 29; William Choong, “NatSteel Electronics Offers 100M Shares,” Straits Times, 30 September 1997, 53. (From NewspaperSG)
39. Lim Mui Khi, “NatSteel Buys 75Pc of Precision-Machining Firm,” Business Times, 5 June 1990, 3; “NatSteel Buys 65% Stake in HK Firm,” Straits Times, 9 July 1992, 40. (From NewspaperSG)
40. Jennifer Lien, “NatSteel Broadway Shares Close 6.4% Below IPO Offer Price,” Business Times, 11 October 1996, 15. (From NewspaperSG)
41. National Iron & Steel Mills, Annual Report 1997 (Singapore: National Iron and Steel Mills Ltd, 1998), 3, 12, 19. (Call no. RCLOS 691.7 NISMDR)
42. David Boey, “NatSteel Chief Leads Surprise $294M Buyout,” Business Times, 4 June 2002, 1 (From NewspaperSG); Ghee Soon Lim, “Battle Over NatSteel: Undervaluation or Inimitable Foresight?” Asian Case Research Journal 8, no. 2 (2004): 134–36, 142. (Call no. RSING 338.74095 ACRJ)
43. Ghee, “Battle Over NatSteel,” 132–72.
44. “Flextronics Completes NatSteel Broadway Buy,” Business Times, 25 July 2002, 6; “NatSteel Brasil Divestment,” Business Times, 22 October 2002, 5. (From NewspaperSG)
45. Wong Wei Kong, “NatSteel Puts Up a Strong Performance,” Business Times, 5 April 2003, 4. (From NewspaperSG)
46. Loh Hui Yin, “NatSteel Sells Steel Ops to Tata for $486M,” Business Times, 17 August 2004, 1. (From NewspaperSG)
47. “NatSteel Gets Nod to Sell Steel Business,” Straits Times, 16 December 2004, H32. (From NewspaperSG)
48. NatSteel Ltd., Annual Report 2004 (Singapore: NatSteel Ltd, 2005), 5. (Call no. RCLOS 691.7 NSLAR-[AR])
49. Wong Wei Kong, “NatSteel Paying $399.7M in Special Dividends,” Business Times, 10 November 2005, 6. (From NewspaperSG)
50. Lee Su Shyan, “Natsteel Rewards Investors with 29₵ Per Share Dividend,” Straits Times, 21 September 2006, H22. (From NewspaperSG)
51. Conrad Tan, “NatSteel Saga Coming to An End,” Business Times, 15 July 2008, 5. (From NewspaperSG)
52. Conrad Tan, “Oei Offloads NatSteel Stake, Happy with Deal,” Business Times, 8 July 2008, 1 (From NewspaperSG); NSL Ltd., Annual Report 2008 (Singapore: NSL Ltd, 2009), 9. (Call no. RCLOS 338.76095957 NSLLAR-[AR])



The information in this article is valid as at October 2018 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

 

Subject
Manufacturing
Iron industry and trade--Singapore
National Iron & Steel Mills Ltd
Steel foundries--Singapore
Trade and industry
Iron foundries--Singapore
Manufacturing organisations
Steel industry and trade--Singapore