Shougang gets US$150m loan for steel mill project

Steel giant China Shougang Group, which holds a 40 per cent stake in Eastern Steel Sdn Bhd, has finalised a US$150 million loan facility to finance phase one of a steel mill project in Kemaman, Terenganu.

Chairman Zhu Ji Min said the facility will be arranged by a consortium of
major banks comprising Hong Kong and Shanghai Banking Corporation, Bank of China and Industrial and Commercial Bank of China.

Eastern Steel, a joint venture between China Shougang Group and Hiap Teck
Venture Bhd, plans to complete the project's phase one, which has an investment cost of RM754 million, by mid-2013 with an annual steel production capacity of 700,000 tonnes.

Hiap Teck executive director Low Choong Sing said the company has also
arranged their own funding by way of private placement, rights issue and
convertible bonds.

The second part of the project, involving an investment of about RM1
billion, would double the mill's annual capacity to 1.5 million tonnes, he told
reporters at the signing ceremony of the financing with major banks here today.

"The current economic situation offers the best opportunity to implement the
project, with much lower raw material costs and fast delivery of equipment
ordered," he said.

Total investment in the project, located at the Kemaman Heavy Industrial
Park within in the East Coast Economic Region, is RM1.8 billion.

Zhu said the overall situation of the steel industry will be better in the
next few years with demand for steel expected to grow on the back of steady
demand from China and Asean countries.

Steel prices currently fluctuate sharply and frequently, mainly due to
developments in the world economy and slow demand from Europe and the United States, he said.

"In the next few years, I am sure the world economy will recover and push
steel prices higher," he said. -- Bernama