Baosteel Aims to have World Highest Competitive Power until 2015

Baosteel advances enhancement of competing power and expansion of production capacity by M&A and new steel plant in Zhanjiang in new management plan until 2015. Top of Baosteel’s think tank, Mr. Wu said, Bao Steel becomes steel maker to have one of the highest competitive steel companies in the world, according to the interview by Japan Metal Bulletin.

Mr. Wu said Chinese crude steel output increased by 10 % for January-July, which is expected to increase by 6-7% for 2011 from 2010. Chinese steel makers’ profit is expected to decrease in the last half of 2011 when steel supply increases despite the demand decrease.

Mr. Wu said Chinese government sets action assignment of cooperate integration, re-examination of deployment of steel plant and abolishment of inefficient equipment, the government plans to increase top 10 steel makers’ crude steel share over 60% from current 48% in 5 years management plan. Mr. Wu pointed out it is important for enhancement of Chinese steel industry. Mr. Wu gave account location of steel plant is inconsequence, crud steel output is about 100 million tonnes per year while the demand is 60 million tonnes in Hebei, the output is low while the demand is large in South area or Southeastern area when there is about 1,000 steel makers in China. Mr. Wu said the government adheres to major steel makers with moderation of relocation and advances energy saving.

Mr. Wu said Baosteel plans to increase production capacity of crude steel to 66 million tonnes and plus something extra in 2015 including Zhanjiang steel plant, while doesn’t acquire approbation of steel plant construction from the government yet, but Is making arrangements full well. Mr. Wu said Bao Steel can construct at an early date if the firm acquires approbation. Mr. Wu gave account production capacity of Zhanjiang steel plant is 10 million tonnes per year.

Mr. Wu said Baosteel seeks good chance of the investment in overseas such as South East Asia, and Baosteel sets a goal to have world highest competitive power

Mr. Wu said Bao Steel imports iron ore at 99% of necessary quantity from overseas. Mr. Wu said mining corporations should keep rational iron ore price. Mr. Wu gave account steel makers isn’t locked tempestuous relationship with mining corporation, but steel makers are reciprocal relation to mining corporations.

Mr. Wu said Baosteel invested to iron ore mine in Australia and Brazil in 2001-2002, while reduces the investment to mine nowadays when there isn’t good chance to invest to mine, but the firm considers if there is good chance. Mr. Wu said the firm purchases coal of 100% from domestic when the firm joins hands with domestic coal miners from a few years ago and organized acceptable purchase system.

Mr. Wu said Baosteel’s crude steel output is about 44 million tonnes in 2010 and expects to be flat in 2011 when the capacity isn’t change in 2011.