Chinese Hebei Iron and Steel inks pact to build steel plant in South Africa

BEIJING (Scrap Monster): China’s second largest steel maker by volume- Hebei Iron and Steel Group will build a new plant in South Africa. The new plant will have a steel production capacity of 5 million metric tons per annum and is expected to be completed in 2019. According to company sources, the proposed plant will be the country’s biggest overseas steel mill outside the mainland.

According to reports, Hebei signed the joint venture co-operation memorandum with the Industrial Development Corp. of South Africa and the China-Africa Development Fund on Wednesday. However, the financial details of the deal were not available immediately.

The construction of the plant is expected to start early next year. The first phase with 3 million metric tons capacity is likely to be commissioned in 2017. The second phase of the construction will add additional 2 million metric tons, which is expected to start production by 2019.

The massive plant is expected to pull steel prices in South Africa to lower levels and boost the steel sector industry in the country. The plant will also contribute to creation of new jobs in the region.

Hebei’s decision to diversify its operation outside mainland follows strict imposition of environmental policies which had forced the steel firm to shutter some mills in the province. The high production costs at Chinese mills have also prompted Hebei Iron and Steel Group to stretch out its operations into other parts of the world.