LNM to set up steel plant in China

The LNM group, owned by non-resident Indian steel baron Lakshmi Mittal, will build its first steel production plant in China with an estimated investment of $100 million and plans to set up marketing, purchasing and manufacturing centres to tap the booming market, a senior official said.

LNM, the world's second biggest steel company, will have its first manufacturing base in Yinkou City in northeast China's mineral-rich Liaoning province with an estimated investment of $100 million.

"We firmly believe China is one of the leading places where we must expand our presence," Malay Mukherjee, president and chief operating officer of LNM Ispat, said.

The Netherlands-based steel giant's first foray into the Chinese market is expected to start operation on a trial basis before the end of 2005, Mukherjee told the Chinese media in Shanghai, China's commercial hub as well as the largest metropolis.

The first phase of the project will include a galvanised plate facility with an annual production capacity of 400,000 tonnes while the second phase of the project will be a cold rolled steel sheet facility with an annual production capacity of 200,000 tonnes.

The second biggest steel company in the world, LNM produced 38 million tonnes of rolled steel last year and recorded sales totalling $12 billion.

LNM's output is expected to touch 42 million tonnes this year as a result of expansion of its original capacity and acquisition of other steel and iron plants, he said.

Last year, the steel major exported close to $2 million worth of rolled steel to China.

He also said the company has targetted a procurement volume in China of some $300 million by 2006.

Such a plan is part of the efforts the company has beefed up in order to increase its presence largely in China, Mukherjee said.

"We need support from Chinese suppliers, and we have to ascertain how much they can do in our annual $8 billion purchase volume worldwide," he said.

For the first six months this year, LNM's purchase volume in China has already reached $40 million compared with merely $5 million last year, Mukherjee said, while attending the LNM China supplier conference, held in Shanghai.

The company unveiled a large package of targetted purchase items for Chinese suppliers, ranging from refractory material, ferroalloy to coke and steel roll at the event.

The China-based procurement of coke, for example, is expected to reach some 500,000 to 700,000 tonnes this year, according to Mukherjee.

The company's massive local purchase plan is regarded by analysts as essential to guarantee the smooth running of the steel major's global operations against the backdrop of present robust steel demand on the markets worldwide, driving the continuous rise of raw materials for steel production.

As a multinational steel conglomerate with a total annual output volume of about 42 million tonnes, LNM has operations in 13 countries worldwide.