Baoshan takes stake in PetroChina pipeline

Baoshan Iron & Steel and its parent Baosteel Group have agreed to invest a total of 10 billion yuan (HK$12.3 billion) to take a minority stake in PetroChina's third west-to-east natural gas pipeline construction.

Shanghai-listed Baoshan, one of the mainland's largest steel smelters, said its board has agreed to take a 12.8 per cent stake in the project, which requires it to invest eight billion yuan of equity capital. The move is aimed at expanding steel pipe sales.

Baosteel Group will take a 3.2 per cent stake and invest two billion yuan of capital.

The project entails a 5,220 kilometre pipeline stretching from Xinjiang Uygur autonomous region in the northwest to northern Guangdong province, as well as eight branch and sub-branch lines. The projects' estimated cost of 116 billion yuan will be funded by 62.5 billion yuan of shareholders' capital.

"Baoshan's participation in the project will help strengthen our strategic co-operation with [PetroChina], and establish a stable supply chain relationship," Baoshan said in a statement.

Baoshan sold 730,000 tonnes of steel pipes in the first half, or 6.2 per cent of its total sales volume.