September 08, 2008

Guangdong gets green light for Zhanjiang Steel complex

It is reported that Guangdong provincial officials have been wracking their brains to hammer out a plan to win approval from Beijing for Zhanjiang Greenfield steel project as Wuhan Iron & Steel has enthusiastically hailed receipt of approval for its Fangchenggang complex in neighboring Guangxi province on March 4th 2008.

Sources close to the provincial government reveals that Beijing has approved Guangdong's final plan which foresees that Baosteel will acquire Shaoguang Iron & Steel and Guangzhou Iron & Steel together the three will set up a joint venture headquartered in Guangzhou city in which Baosteel would have a controlling stake.

As per report this proposal has sorted out the tax apportionment a major obstacle hampering the steel complex. The Zhanjiang Steel Complex would pay tax to Shanghai, Guangdong Provincial government and even Zhanjiang municipal government in addition to the central government. Moreover, Shaogang promises to dismantle a small BF and converters under 20 tonnes while Guanggang will shut down all up and downstream facilities in Guangzhou. To win support for the new project, Guangdong province will eliminate about 10 million tonnes per year of crude steel capacity.

Guangdong provincial government reveals that the steel complex would help boost progress of a series of infrastructure projects. On March 20th 2008, the local government in Zhanjiang has convened a meeting to embark the construction work of diversion works, Maoming Zhanjiang Railway, by line Railway of East Island of Zhanjiang within this year. Moreover, the steel project is also expected to help underpin some down stream sectors. Guangdong provincial official told the reporters that the renowned Samsung automobile project might re launch after the steel project has been landed.

The provincial official is optimistic that Zhanjiang steel complex would give a boost to the economic growth both in the city and the province as a whole.