China’s Baosteel to build $2.5 bn joint venture mill

China’s Baosteel to build $2.5 bn joint venture mill

Shanghai : Shanghai Baosteel, China’s largest producer of steel, said on 6 September it will build 19.4 billion yuan ($2.5 billion) millwill with Handan Iron and Steel Group.

The plant in Hebei province in northern China will have an annual capacity of 460 tonnes and will be completed by 2010, Baosteel said in a statement to the Shanghai stock exchange.

Baosteel and Handan Iron and Steel signed in May a letter of intent that underlined terms in the 50-50 stake venture, the statement said.

China has been encouraging consolidation and cooperation among major state steel companies amid concerns of overcapacity and to create companies able to compete with global steel makers.

The announcement followed a state press report on 5 September that Baosteel will nearly quadruple capacity to 80 million tonnes by 2012, which would make it the world’s second largest producer after Arcelor Mittal.