Companies

Anshan still bullish on US deal

By Zhang Qi (China Daily)
Updated: 2010-08-21 09:14

A visitor outside the Angang Steel stall at an exhibition in Shanghai. [Jing Wei / For China Daily]

Steelmaker confident of overcoming objections to investment

BEIJING - Anshan Iron & Steel Group said on Friday that it remained committed to an investment deal in the United States, a day after reports that it had delayed the deal following objections from a group of US congressmen.

The nation's fourth largest steelmaker said it is committed to working closely with US partners to push forward the Steel Development Corp project.

Earlier reports said Chen Ming, the vice-chairman of the listed unit Angang Steel Co, had indicated that the company may shelve the investment plan due to opposition from US lawmakers.

"The latest we know is that the US government will support the project. Hence, we will continue to work on the deal," Angang's board secretary Fu Jihui told China Daily.

An Anshan Iron & Steel statement to China Daily quoted Chen Ming as saying on Thursday: "Anshan Steel is still talking with its American partners for the joint venture. Since Anshan has not made any investments, it will not incur any losses even if it withdraws from the project."

Anshan Steel in May this year said it was investing in a steel-rebar project with a US start-up Steel Development Corp in Armory, Mississippi.

The US Congressional Steel Caucus in June urged the Obama administration to obstruct the proposed joint venture as it threatens "American jobs" and "National Security".

Nearly 50 lawmakers have urged the US Treasury Department to investigate whether Anshan Steel's investment could be blocked.

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Anshan Steel in July said it would invest $175 million for a 14 percent stake in the rebar plant in Mississippi, which could create local jobs and increase tax revenues and supplies.

Analysts said rebar is commonly used in concrete and masonry structures. The project, with an annual capacity of 300,000 tons of rebar is unlikely to have any impact on the US steel market.

"The national-security worry is spurious," said John D Watkins, chairman of the American Chamber of Commerce in China.

"Steel Development will produce rebar from recycled steel, and while the company's approach is innovative, the process itself is low-tech. The total output represents 0.3 percent of the US steel market. Anshan will take no more than a 20 percent stake and have no management control."

The protests over Chinese investment projects in the US market began in 2005 when China National Offshore Oil Corporation offered $18.5 billion to acquire Unocal Oil Company. The bid faced strong opposition from US lawmakers on grounds of it being a national security threat and was scrapped.

Watkins said the Anshan investment will benefit the US in terms of new jobs and hence lawmakers should think twice before blocking the transaction. "Doing so will have far reaching consequences for US exports and investment in China," he said.

"Rejecting this deal could start a cycle of anti-trade measures across the Pacific that would be difficult to stop," he said.