Baosteel has abandoned a proposed joint venture to build a steel mill with Brazilian mining firm CIA Vale do Rio Doce due to the weak steel market and local opposition.
Both companies have now decided to liquidate Companhia Siderrgica Vitria (CSV), the joint venture set up for the project.
Chen Ying, secretary of Baosteel Ltd, said she could not comment as the decision was made by the parent company Baosteel Group.
Baosteel and Vale had signed a plan in August 2007 to build a five-million-ton steel slab plant in the southeastern Brazilian state of Espirito Santo with Baosteel holding an 80 percent stake in the joint venture. Construction on the plant was expected to start early this year with production planned for the end of 2011.
The plant was to be close to local iron ore deposits and savings were expected to come from not having to ship raw materials to the plant. Shipping costs from Brazil to China reached as high at USD108 per tonne in the middle of last year, though the level has now fallen to less than USD15 per tonne.
As well as the falling demand for steel worldwide the project, which would have generated 4,500 jobs, has also encountered Brazilian opposition due to its possible threat to local environment. The state government in Espirito Santo had wanted the two companies to relocate the plant for environmental concerns.
Source: Xinhua; China Daily
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