CSC Budgets NT$10 B. to Import Raw Materials

Taipei, March 3, 2011 (CENS)--Faced with the price spike in raw materials internationally and political unrest in the Middle East, China Steel Corp. (CSC), Taiwan's largest integrated producer of steel products, has mapped out a five-year plan to import raw materials at a cost of over NT$10 billion (US$338.98 million).

CSC chairman J.C. Tsou said the five-year plan will help his company raise self-supply ratio to 30% from present 5% aimed at ensuring acquisition of enough raw materials.

It is said that CSC is having talks with three owners of coal and iron mines in Australia for investment cooperation. The company plans to have 5% up to 10% shareholdings in these mines. Investing in these mines will make fruits sometime in June this year.

Over the past few years, CSC has been deploying in upstream industries by obtaining 5% stake in Australia's SONOMA coal mine, 1% stake in Brazil's NAMISA iron mine, and 5% stakes in South Korea's Dongbu Metal, with total investments amounting to NT$4.73 billion.

To boost investments in overseas mines, CSC has especially set up a material development unit. Tsou noted the smooth investments in overseas mines will help secure materials and reduce procurement costs, in addition to raising self-supply ratio in raw materials.

Thanks to the price volatility of raw materials in the international marketplace, CSC has seen the ratio of raw materials over total production costs rise to 70% from the past between 50% and 60%. Accordingly, the investments in overseas mines will help it reduce production costs in an effective way.

In addition to investing in overseas mines, CSC has also expanding overseas production and setting up overseas distribution channels. For instance, the company will begin construction of a cold-rolling factory in Vietnam in the first half of this year. The factory is designed to have an annual output of 1.2 million metric tons of cold-rolled steel with major products including cold-rolled steel, galvanized steel coils and electromagnetic steel plates.

The proposed plant in Vietnam is expected to complete test runs in the first half of 2013 and launch mass production in the second half. After completion, the plant will be able to see annual sales amount to US$1 billion, becoming the beachhead for it to tap the Southeast Asian market.

CSC said it will set up a business representative office in India sometime in June this year. In the foreseeable future, the company will also set up a steel-shearing center and roll out downstream products in India.