Baosteel plans CR investment in Pakistan

Wednesday, 12 September 2007 13:32:40 (GMT+3)   |  
       

Baosteel Group is planning to build a 300,000 tons capacity cold rolled steel plant in Pakistan, in corporation with Pakistani Sapphire Group. For this purpose, the group sent a delegation to Pakistan.

Currently, the cooperation negotiation between Baosteel and Sapphire Group is in the first phase and details have not been clarified yet. According to the messages from Baosteel, if this project proves to be successful, Baosteel would also consider to build an HR plant in order to use the local rich iron ore resources which is at around 1.42 billion tons. 

In May 2007, Baosteel made a similar plan for investment in Pakistan. However, due to uncertain overseas development strategy and a series of crucial interior personnel and position adjustments, Baosteel decided to cancel the plans.

This time, Baosteel's investment is likely to be realized. Pakistani steel industry promotion plan is to reach the output 8 million tons in 2010 and the favored policies for the foreign investors will help Baosteel and other potential investors to make their mind.

According to the messages from inside, Baosteel is seriously interested in the planned joint venture and it is in accordance with the basic thought of "expansion" in Baosteel's new strategical development plan 2007-2012. In addition to domestic M&As and capacity expansion, Baosteel is also focusing on seeking proper overseas projects to increase the number of plants and the output abroad.

Besides, Pakistan is a promising market within rapid growth period. Currently, Pakistan's steel demand per year is over 5 million tons. 4.4 million tons (long products 3.7 million tons and flat products 700,000 tons) can be met by local producers while the rest has to be imported. According to the information from Pakistani government's investment-related officials, the average increase rate of local demand for steel is around 20 percent, namely 1.2 million tons per year. Currently, the foreign direct investment (FDI) flowed into Pakistan is on the remarkable upswing. In July 2007, the first financial month of 2007-2008 in Pakistan, the in-flow FDI is $188 million, up 14 percent compared to the same period in the last year. Among them, 50 percent is invested on oil & gas exploration and transportation, trade and traffic system. It's good news for steel demand.        

The amicable relations between Pakistan and China is another factor supporting the investment. There is a long history of traditional friendship between China and Pakistan. The bilateral tight cooperation of economy and politics will offer a beneficial background for Baosteel to avoid potential risks. As a matter of fact, this CR project is supported by the two governments.


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