Guangdong 's Zhanjiang municipal government has signed an agreement with three steel firms about building one of the country 's largest iron and steel plants, a newspaper has reported.
Shanghai-based Baosteel Group, its subsidiary Baosteel Co Ltd and Guangdong Shaoguan Iron and Steel Group are reported to have signed the agreement with the local authority in Guangzhou on Monday.
The Hong Kong-base Ta Kung Pao newspaper, quoting a reliable source, reported the news yesterday.
An official with Zhanjiang municipal government, who asked for anonymity, told China Daily that he had heard of the agreement.
Further confirmation of the deal came from an employee at Baosteel, who also refused to be identified.
No party involved in the deal has publicly disclosed details of the agreement, including the investment involved and the project 's timescale.
According to the report in yesterday 's Ta Kung Pao, the joint venture will have a registered capital of 20 billion yuan (US$2.5 billion); total investment of 140 billion yuan (US$17.5 billion); and an initial investment of 70 billion yuan (US$8.8 billion).
Initial production capacity will be 10 million tons of premium-quality steel plate annually for the automobile and consumer electronic industries.
The project will have an annual production capacity of 20 million tons when fully operational.
Guangdong 's annual production capacity of iron and steel stands at 7 million tons at present, although its annual consumption is 28 million tons.
Earlier this year, Xie Qihua, president of Baosteel Group and Baosteel Co Ltd, told the media that the Zhanjiang project, if approved as scheduled, would have a production scale larger than Baosteel 's headquarters in Shanghai.
The project is expected to make Baosteel the third largest iron and steel producer in the world in 2010. It is currently the sixth largest.
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