JFE Steel to Build Up Cold Sheet at Chinese JV with Guangzhou Iron and Steel

JFE Steel announced on Tuesday the firm agreed with Guangzhou Iron and Steel Enterprise Holdings on a cold rolling mill project in Spratly development area in Guangzhou, China. JFE Steel and Guangzhou Iron and Steel will introduce new productive equipment at Guangzhou JFE Steel Sheet Company (GJSS), their joint venture to produce hot-dip galvanizing steel sheets for automobiles; a continuous cold rolling mill with capacity of 1.8 million tonnes per year, continuous annealing equipment with capacity of 1 million tonnes per year and no.2 hot-dip galvanizing line with capacity of 400,000 tonnes per year. At the same time, the JV’s share ratio will be changed to 50% by JFE Steel and 50% Guangzhou Iron and Steel from current 51% by JFE Steel and 49% by Guangzhou Iron and Steel. GJSS was established in autumn 2003. GJSS completed the construction of no.1 continuous galvanizing line (CGL) with capacity of 400,000 tonnes per year in March 2006 and held an opening ceremony in Guangzhou on March 6. Joint business of hot-dip galvanizing sheet was the first step of the JV. The parent companies considered to extend their joint areas to cold rolling business. They conducted feasibility study in 2006 and reached a basic agreement on March 6, 2007. In order to meet the demand for high quality automotive steel sheets, they will expand the business of GJSS and build additional production facilities including a cold rolling mill, a continuous annealing line and no.2 CGL. Following the agreement, the parent companies continue to work out the details of the joint business and will conclude an official joint venture agreement after obtaining approvals from Chinese governmental organization. Construction of the new equipment is planned to start within 2007 and finish in 2010. GJSS supplies hot-dip galvanized sheets mainly for automobiles, as well as some appliances and building materials. The parent companies have invested total US$ 170 million for GJSS so far. The JV’s capital stock is US$ 76 million. GJSS has 200 employees.