Xinxing Pipes, US McWane ink joint venture agreement

SteelOrbis Shanghai Hebei based Xinxing Pipes Co. Ltd and US McWane Inc signed a formal joint venture intention agreement on July 19. According to this agreement, the two parties agreed on cooperating on the manufacture and sales of casting pipes, pipe fittings, drain pipes, valve and etc. Accordingly, the companies will restructure their operational assets related with the afore-metioned businesses in order to establish several joint ventures. Sources reported that Xinxing Pipes will own 70-75 percent of the joint venture with its asset and cash investments, while McWane will own 25-30 percent. The total assets of the joint venture will worth RMB 3.21 billion ($402 million). The anticipated annual production capacity of the joint venture for Phase I consists of 1.2 million mt casting pipe, 30,000 mt pipe fitting, and 30,000 mt drain pipe. The joint venture will later expand the capacity to the annual production of 1.5 million mt casting pipe, 50,000 mt pipe fitting, 50,000 mt drain pipe and 10,000 mt valve in order to gain a favorable position in the world market. Xinxing Pipes is a listed company on Shanghai stock exchange. It is the second largest ductile iron pipe producer in the world with 1.1 million mt per annum world quality production. The company has 50 percent share in the domestic market, and exports 30% of its products to 60 countries. McWane, on the other hand, is a multinational group with its headquarters based in Birmingham, Alabama, US. Its sales revenue in 2005 was $1.7 billion.