China Steel Targets 30% Own Raw Materials Rate

Taiwanese steel major, China Steel (CSC) targets to secure 30% of own raw materials in around 5 years. The firm increases the own raw material rate from current less than 2% to 8% in fiscal 2012. The firm tries to reduce raw materials cost through the captive ore along with utilizing technology for lower grade ore. The firm secures 9.15 billion New Taiwan Dollar at Australian subsidiary for potential investment. The firm tries to secure profit through the raw materials effort and marketing effort at home and abroad under severe business condition.

The chairman J. C. Tsou said to a reporter of Japan Metal Bulletin at the headquarters the firm secures the raw materials investment fund at Australian subsidiary for quick move. The firm already decided to get 10% interest in MDL 162 coal mine held by MCG of Australia for around 9 billion yen. The firm eyes aggressive investment in raw materials.

Mr. Tsou said the lower profitability is due to higher raw materials cost, lower steel selling price under severe competition and lower users’ sentiment. He said the firm studies long term action on the raw materials issue while the issue cannot be solved in short term. He said the firm also tries to discuss with miners on price and term to reflect raw materials supply condition.

The firm aggressively developed technology to use lower grade ore in 2011. The firm realized more than 100 million New Taiwan Dollar of cost reduction.

The firm already has interests in coking coal mine of Australia and lime stone mine in Taiwan while the firm got 1% share in Namisa iron ore mine of Brazil. The firm also got 5% share in feromanganese maker, Dongbu Metal of South Korea.

China Steel also tries to improve production and sales side. The group company, Dragon Steel starts operation of second blast furnace in the year and China Steel starts operation of No.3 electrical steel making line in 2014. The firm also completes construction of Vietnamese cold rolling joint venture with Sumitomo Metal Industries in 2012 and Indian electrical steel making plant and expands the production capacity of steel products to annual 20 million tonnes in 2015.

The firm also expands processing bases in emerging countries. The firm builds 2 coil centers in China. The firm increases the coil centers to total around 10 plants especially in Asia for better user service.