Joint Funding & Cooperation of Building 100 Thousand Tons of Ductile Iron Pipe Overseas

At present, there are about 30 plants of ductile iron pipe whose total designed capability has surpassed 3 million tons and some newly-built ductile caster pipe plant shoots in some places. Though there is an increasing demand of ductile pipes and the number of newly-built ductile caster pipe is rising, we cannot get rid of furious competition with supply overriding demand. Libya, a country being shortage of water, situated in Africa, plans to introduce southern underground water to coastal city of north, and the total investment of the project is US$30 billion. Now the first phase and the second one have been finished, and the third phase is on proceeding. We need to import a quantity of pipes materials. We can export ductile iron pipe to the neighboring countries which needs 0.2-0.3 million tons per year or to the south of Africa and northern Europe in the aim of expanding the market. Thus, it is prosperous to build ductile iron pipe plant in Libya (or other countries) and also it will drive the sales of the domestic production. Ⅰ. Content 1. Construction Annual production of the ductile casting pipe with T-shape and diameter DN100-DN1600mm will reach 100,000 tons (effective length 6m) .It will take 20 months to finish the project after it is approved. 2. Main techniques As for DN100-DN1000mm and DN1200-DN1600mm, we will introduce water-colded metal centrifugal casting techniques and color-painting casting techniques, respectively. 3. Investment evaluation and economic analysis The total investment of the project is US$45.73 million equivalent to RMB 377.73 billion.(including equipment cost US$18 million, land construction cost US$10.12 million, installing cost US$0.9 million, US$ 16.76 million for others). Upon reaching the full production capability, we will realize a total turnover US$64.88 million, total annual profits US$23.63 million, net profit US$13.46 million. The internal rate of return for total investment shall be 31%, the recovery term of total investment is 4.7 years. Ⅱ. Project advantages 1. Location and resource consumption The plant covers 33800m2 of construction area and 118300m2 of total area. The water consumption is 8.81m3/t , compressed air is 100Nm3/t and natural gas 1.92m3/t. The electricity consumption is 400kWh/t.This area enjoys low waste steel and electricity price, plenty natural-gas and low labor charge, therefore it enjoys lower cost than other places in China. 2. Market advantage Libya intends to build artificial canal and provide 6200,000m3 water to the residents daily through water pipe networks. Therefore, it needs a lot of water pipe networks. Pipe networks are also exported to other countries. 3. Policy advantage Libya has put forward favorable policies on product exportation as well as material and spare part importation. The new project will be allowed a tax exemption for the first five years after putting into production. Ⅲ.Mode of Joint funding & cooperation The partners establish joint venture legally. Specific joint scheme and investment volume could be confirmed by negotiation after studying the feasibility together. Both sides should participate in operation and allot a profit and bear the responsibility according to ratio between investments.

Joint funding and cooperation of building cold-rolled steel sheet at seaport

Dalian Dongzhan Group Co., Ltd. (hereinafter short for Dongzhan Company) was established in April, 2001. It belongs to business & trade part of Beitai Iron & Steel Group Company, and a comprehensive enterprise group integrating domestic & foreign trade, logistics, financial pawn and wood products processing on the basis of business &trade and logistics of Beitai Iron & Steel Group Company. At present, it has a total employee of over 600. The annual business revenue is RMB 20 billion yuan. The annual transportation capacity is 100 thousand tons. The pawn business revenue is RMB 1 billion yuan. The annual productivity of wood window is 300 thousand m2.
In recent years, the domestic consumption of cold-rolled sheet is on the rise year by year. However, the total production & energy is comparatively insufficient. In order to grasp the market opportunity, Dongzhan Company intends to cooperate with foreign and domestic investors, bring the advantage on policies and geographical environment of coastal cities into full play and build 1750mm cold-rolled steel sheet project with domestically advanced level.
1. Project content
(1) Production scale, steel grade, product specifications
Dongzhan Company intends to construct cold rolled steel sheet project with annual production of 1.3 million tons of commercial sheet & coiling in Dalian, a coastal seaport city in Liaoning province, among which commercial cold rolled steel sheet is 900 thousand tons, hot galvanized commercial sheet & coiling 250 thousand tons and color-coated commercial coiling 150 thousand tons. Our main products are thin-thickness cold rolled strip steel, which is in insufficient supply in China. The specifications of our main products are: thickness 0.3~2.0mm, breadth 900~1600mm, length 1000~4800mm.
(2) Main equipment
The project adopts CDCM production technology, which is the most advanced one in the world. The production of high-end products in Bengang and Baogang adopts this technology. The main equipment include CDCM set, continuous hot galvanizing set, color coating set, bell-top annealing furnace, single stand leveling set, transverse cropping set, recoiling & de-coiling set, steel sheet packaging set, steel coiling packaging set and etc. The key equipment will be imported from foreign countries and the remaining equipment will be purchased in China.
(3) Progress
The construction period of the project and the period for reaching the full production capability will be 2 years and 3 years, respectively. After it’s put into production, the output in the first year and the second year will reach 75% and 95% of designed capability, respectively. From the third year, the project will reach full-capacity production with annual productivity 1.3 million tons of steel coiling.
(4) Investment evaluation and economic appraisal
The total investment of this project is RMB 4.5308786 billion yuan, including static investment RMB 4.14025 billion yuan, dynamic investment (loan interest in construction period) RMB 214.81 million yuan, minimum fluid fund RMB 175.82 million yuan.
After the project being put into operation, there shall be sales revenue of RMB 5700 million Yuan and total net profit of RMB 356.68 million Yuan. The internal profit margin is 15.14% after the whole project being completed, which is higher than the basic profit margin, as well as the bank interests of the corresponding period.
2. Project advantage
(1) Policy advantage
China has advanced the strategy of revitalizing the old industrial base in northeastern China, which provides a series of preferential policies for state-owned enterprises in Northeastern China. The project also received attention and great support from Liaoning provincial government, Dalian municipal government and all kinds of financial institutions.
(2) Talent advantage
Beigang Group has a strong, united, and efficient leadership with rich experience in business management, which provides a lot of excellent management talent. In addition, with years of rich experience in iron & steel production, Beigang Company has mastered a lot of technical know-how in iron & steel production and trained a lot of talents on production management and technology, which supply a lot of high-profile talents with strong technological and academic background.
(3) Market advantage
Northeastern China is China’s old industrial base. However, it’s poor in production of high-quality and high-level cold-rolled and deep-processed products. Therefore, it’s of broad market prospect to produce cold rolled products and galvanized products with a high-startup and high-level production line of cold rolled and deep processed products.
(4) Advantage on raw materials
The hot rolled steel coiling needed for the project all come from the under-construction 1780mm hot rolling mill. Therefore, the supply of raw materials is guaranteed.
(5) Transportation advantage
Coastal cities, such as Dalian, enjoy superior geographical location and convenient transportation. The raw materials can be delivered directed to such coastal industrial cities as Shanghai, Guangdong, Tianjin and etc. or exported through these coastal cities.
(6) Perfect sales network
Beigang Company has established close relationship with many steel users in the field of products sales and post-sales service. Upon completion of the project, we can take advantage of the existing sales network to sell products and win the market quickly.
3. Mode of cooperation and joint funding
Investors could invest in this project with their fund, technology, equipment and etc., and legally found joint venture with Beigang Group. The detailed cooperation program and investment amount can be determined through mutual consultation. Both partners participate in business management, distribute profits and assume risks according to their investment proportion.

Joint Funding & Cooperation for Mineral Resources Project of Refined Iron Powder, Nodulized Iron, Limestone, Coal, Manganese Mine, Etc.

In recent years, with the development of iron and steel industries, the mineral resources for iron making are in insufficient supply and its prices increase greatly. The production capacity of iron & steel in Beigang increases year by year and the demand on mineral resources (refined iron powder, nodulized iron, limestone, coal, manganese mine etc) also increase sharply. The production capacity of iron in Beigang has reached 6 million tons. Under this condition, it's very important to utilize the mineral resources in neighboring regions. In order to guarantee the sustainable development of Beigang and restrict and shortage of raw materials, Beigang intends to cooperate with enterprises of all kinds in neighboring regions. Ⅰ. Content Beigang inputs a certain amount of fund and jointly develops resources, including refined iron powder, nodulized iron, limestone, coal, manganese mine and etc. Beigang solves the problem of tight power supply in mines and increases production capacity for cooperation partners inputting fund, technologies and equipment, extends secondary production and perfects equipment and technological revamp. Both parties sign a long-term cooperation contract of 10~12 years long, which guarantees the long-term supply to Beigang. Ⅱ. Mode of joint funding & cooperation 1. Joint funding Beigang inputs fund, technologies, equipment and etc. as its investment and legally establishes a joint venture with cooperation partners. The cooperation partners engage in the business management & operation, share profits and assume risks according to their respective investment proportion. The cooperation partners guarantee the supply of resources to Beigang. 2. Compensation trade Beigang inputs a certain amount of fund for cooperation partners, which is used for replenishing the cooperation partners' fluid fund or technological revamp so as to extend their production capacity. Under certain duration, the cooperation partners supply products to Beigang at a fixed price. 3. Complete acquisition Beigang can acquire cooperation partners' resources or companies. The acquisition price can be decided through mutual consultation or estimated by a agency. 4. Strategic cooperation Beigang can sign long-term strategic cooperation contracts with cooperation partners. Under the similar condition, Beigang will purchase the products of cooperation partners at priority and cooperation partners supply products to Beigang at priority so as to withstand any market risks. 5. Financing cooperation According to cooperation partners' need on fund, Beigang can give loans to cooperation partners according to bank's interest rate so that they can extend production capacity. Cooperation partners pay back within a fixed duration. Meanwhile, they should guarantee the supply to Beigang within certain period. 6. BOT mode According to this mode, Beigang will utilize cooperation partners' resources to construct project and operate. Beigang will give back the complete project together with the resources to cooperation partners in certain fixed years.