Shougang sets up 6.4-bln-yuan CR steel venture

Shougang Co Ltd announced that it aims to set up a cold-rolled sheet company with its parent Shougang Group and Beijing Automobile Investment Company. Total investment is expected to be 6.4 billion yuan ($937 million) with registered capital of 2.6 billion yuan.

This project is expected to be completed this year, as a highlighted growth point for Beijing Shougang Co, which had closed down three of its four blast furnaces before the Olympics, reducing its production capacity to 2 million tonnes per year.

Shougang will pour 1.83 billion yuan in forms of material goods and assets into the project, and take up 70.28% of the registered capital; while Shougang Group contributes 9.72%, or 253 million yuan by its illegally owned land-use right, and Beijing Automobile injects 20%, or 520 million yuan.

So far, Shougang has poured 4.88 billion yuan in forms of physical assets into the project, of which 1.57 billion yuan has been injected into the company, with the remainder transformed to the new venture's liability to Shougang.

Hebei Shougang Qian'an Iron & Steel Co will provide steel billet for the new startup to ensure a stable production with the billet price will be determined by the market price or negotiated by the two parts.

The cold-rolled sheet plant started construction from July 2005, with production capacity of 1.5 million tonnes per year including 0.7 million tonnes of CR sheet and 0.8 million tonnes of hot-dipped galvanized sheet. Its products are mainly targeting household appliances, high-grade construction and auto production and aiming at Northern market.

Shougang also noted that it has jointly established an investing company with Sichuan South Hope Industries Co Ltd on April 18th 2007 by injecting 25.5 million yuan each in Guizhou. And the new JV has secured 35% stakes in Guizhou Songhe Coal Industry Development Co Ltd in Jul 2007 by investing 50 million yuan and becoming the biggest shareholder of the latter.