China's Erdos Cashmere Group Corp plans soon to start a $42 million plant to supply silico-manganese to Asia's fast-expanding steel sector, a company executive said.
Erdos, China's largest producer of cashmere textiles, will operate the plant in the Inner Mongolia region with Japanese partners Mitsui and Co Ltd and JFE Steel Corp, the world's fourth-biggest steel maker.
"The capacity is 12,500 tonnes monthly. We expect the plant to be operating at full capacity by the end of this year," Allan Wang, managing director of Erdos Group's Hong Kong office, told Reuters in a written reply to questions.
Silico-manganese, used to strengthen steel, has risen in value in line with higher steel prices as Asia builds more houses and consumes more cars and household appliances.
Asia makes more than half the world's steel. China is the top producer, melting 193.8 million tonnes in January-July 2005. Second-ranked Japan made 66.2 million tonnes in the same period, data from the International Iron and Steel Institute showed.
Wang said the new plant would supply between 50,000 and 100,000 tonnes a year of silico-manganese - between one-third and two-thirds of capacity - to JFE Steel. Mitsui has an option to take the rest and Erdos Group can sell any remaining alloy.
More famous for its cashmere than its ferro-alloys, Erdos has built on trading links with Japanese companies, including Mitsui and Co, set up in the 1980s, Wang said.
Erdos owns 51 percent of the joint venture and the two Japanese partners each have 24.5 percent, Wang added.
Trial runs are under way at a new power plant to serve the silico-manganese operation. Total investment in the power plant would amount to nearly 6 billion yuan ($743 million), Wang said.
He said the company diversified into ferro-alloys to take advantage of raw material, power and water resources around the city of Erdos in Inner Mongolia. The group already runs five ferro-silicon plants in an industrial park there.
Erdos Electric Power and Metallurgical Industry Co Ltd, in which the group has a 91 percent stake, runs the ferro-silicon plants, which have capacity of 10,000 tonnes a month.
Wang said Erdos had invested 610 million yuan in the ferro-silicon plants to date, with spending set to rise to 901 million yuan as the facilities expand.
By April 2006, capacity would rise to 33,000 tonnes a month, he said. Full capacity would eventually reach 500,000 tonnes a year, he added, or about 42,000 tonnes a month.
He said about half of the company's ferro-silicon output was sold in the domestic market and half was exported, mainly to Japan, South Korea and Taiwan.
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