Firms strike US$1 billion steel JV

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Last updated at: (Beijing Time) Tuesday, September 23, 2003

Firms strike US$1 billion steel JV

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Guangzhou Iron & Steel Enterprises Holdings Ltd Monday signed an agreement with Japan-based JFE Steel Corp to set up a joint venture manufacturing hot-dip galvanized steel sheets at the Guangzhou Nansha Economic and Technological Development Zone.

Guangzhou Iron & Steel Enterprises Holdings Ltd is one of China's leading suppliers of iron and steel, while JFE Steel Corp, founded in April from the Kawasaki Steel Corp and NKK Corp, both of which are Japan's leading steel suppliers, is a top supplier of high-value-added steel products in Japan. JFE Steel Corp is capable of an annual iron and steel production output of 27 million tons.

Total investment for the joint venture, or Guangzhou JFE Steel Sheet Company Ltd, is US$1 billion, and investment for the initial stage of the project is US$200 million.

JFE will make up 51 per cent of the capital input, with the remaining 49 per cent coming from Guangzhou Iron & Steel Enterprises Holdings Ltd.

In its initial stage, the joint venture will specialize in the production and marketing of hot-dip galvanized steel sheets primarily for the automobile industry, with some for the electric appliance industry and construction applications.

The enterprise will consider diversifying its products including cold rolling steel products later.

The project is set to break ground in early 2004 and start operations in April, 2006. The initial annual yield is set at 400,000 tons.

"The project will help satisfy the rapidly intensifying domestic market demand and the enterprise will at the same time benefit handsomely from the promising bonanza," noted Yuan Jinxi, chairman of Guangzhou Iron & Steel Enterprises Holdings Ltd.

Yuan's idea was echoed by Fumio Sudo, president of JFE Steel Corp.

Few iron and steel enterprises, if any, are able to produce hot-dip galvanized steel sheets in China. Domestic automobile makers and household appliance suppliers have to rely very heavily on imports, primarily from Japan and South Korea, according to reliable sources.

Domestic market demand for hot-dip galvanized steel sheets has been rapidly intensifying in the past few years in tandem with mushrooming auto and household appliance projects across the nation.

Official sources say China yielded 3.10 million automobiles, including 1.88 million sedans last year, and the nation is expected to turn out 6.10 million automobiles in 2005.

And in Guangzhou alone, Japan's Honda, Nissan and Isuzu have all set up automobile joint ventures; and Toyota is reported to be planning to set up a joint venture manufacturing Camery sedans in the near future.

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