Baosteel plans to establish steel plant in India

Baosteel plans to establish steel plant in India

Ms. Jiang, chief representative in the Beijing office of India-based India-China Trader Center, confirmed last Tuesday (November 1) that Baosteel received approval from the Indian Foreign Investment Management Department to proceed with company plans to set up a steel mill in India. The approval will help Baosteel accomplish its goal of becoming one of the top three global iron and steel companies by 2010. Baosteel's current output is 20 million metric tons, and it needs to break through the 50 million metric ton barrier if it hopes to mix with the likes of Arcelor and Mittal. Baosteel has been increasingly focusing on overseas investments in order to achieve its goal as there is little possibility for it to expand domestically in light of Beijing's new iron and steel policy. For instance, Baosteel had planned a 20-million-metric ton project for Zhanjiang in Guangdong Province. However, Wuhan Steel's own project with Fang Cheng Port in Guangdong Province looks likely to derail Baosteel's Zhanjiang plan since Beijing will not allow for two large-scale steel mills (annual capacity of greater than 10 million metric tons) to be established in neighboring provinces. Industry insiders indicate that potential overseas countries for Baosteel's future expansions should meet two requirements: 1. The countries should have an abundance of iron ore, which is crucial as transportation costs are being driven up as the ocean freight market tightens. 2. There needs to be an increasing demand for iron and steel products in the regions where the plants would be located. Such requirements essentially limit Baosteel's options to India and Brazil. Currently, Baosteel's plan to invest in Brazil has met with some difficulties; therefore, India is an important option for Baosteel. Sources report that in order to be among the top three iron and steel companies in the world, Baosteel needs to not only enhance its development in the Chinese market, but also expand to foreign markets. So in addition to India and Brazil, Baosteel's other potential markets could include Russia and Eastern Europe. SteelOrbis Shanghai