A unit of Singapore lender Oversea-Chinese Banking Corp. is investing in a steel producer to aid the development of $1.5 billion low-carbon steel project.

The investment will help build a plant producing hot-briquetted iron--a critical component in low-carbon steel production--within the wider Malaysian project, which is estimated to have an annual production capacity of 2.5 million metric tons, OCBC said Monday. The plant is scheduled for commissioning by 2030.

The funding was extended by OCBC's mezzanine capital unit to Singapore-based Green Esteel, which focuses on low-carbon steel production and prefabrication. The investment amount wasn't disclosed.

Green Esteel is a major shareholder of Singapore-listed steel company BRC Asia.

OCBC said low-carbon steel production can potentially cut carbon emissions by up to 80% compared with traditional methods.

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

Shares of OCBC fell 0.7% to 18.78 Singapore dollars, equivalent to US$14.49, as of the midday break on Monday.