German conglomerate Krupp Hoesch International has agreed to invest US$1.4 billion in a stainless steel joint venture in Shanghai to enable it to expand its logistics and transport business on the mainland. Executive board member Gerhard Riemann said the group, which was also studying other projects in China, signed a letter of intent last year to establish the steel plant and signed the final contract recently. It is understood that Krupp is to put $1 billion into the factory and use the balance for working capital. Krupp plans to channel the fabricated stainless steel in Shanghai through its own distribution network worldwide. The group carries out air freight operations through its 51 per cent stake in J.H. Bachmann, an air cargo company which has been in the business for 20 years. Bachmann has offices in Canada, the United States, Columbia, Brazil, Argentina, Antwerp, South Africa, Hong Kong, China, Indonesia and Thailand. Krupp's shipping operations to this part of the world involved the shipment of one million tonnes of iron ore from Brazil to Baoshan so far, Mr Riemann said. 'We would like to go in bigger volumes in this market here and follow a strategy of bringing the materials in at competitive rates,' he said, adding that transport and logistics was one of Krupp's core businesses. Mr Riemann said Krupp was interested in introducing a 6,000 horse-power push-barge transport system in the riverine areas of Shanghai. Germany had an excellent barge system for moving bulk material between Rotterdam and rural areas. The system comprises four to six barges of 2,500 tonnes each and can carry a total of 15 tonnes. Covered barges are used for dry material. The system or an improved version adapted to China's river conditions could be created. It could run for 24 hours a day and might be introduced with second-hand vessels. Wah Kwong managing director George Chao Sze-kwong, who is a Shanghainese, said his company was willing to help Krupp to work out the details and implement the plan in Shanghai. Wah Kwong has several property projects in Shanghai and has built vessels in the local shipyards. Mr Riemann, who met the Shanghai vice-mayor, Meng Jianzhu MJZ, during his July visit, was impressed by the construction and development work going on in Shanghai. The Krupp group's shipping and logistics division was aiming to double its business by the year 2000, Mr Riemann said. Since the division started in 1990, Krupp's board had ordered its re-organisation and had doubled its turnover in the past five years. Krupp and Thyssen, the biggest German stainless steel producing group, established a plant about 11/2 years ago in Germany for fabricating stainless steel - turning stainless steel into rolls and different types of packaging. Krupp took a 60 per cent stake in the venture while Thyssen held the balance. Krupp also took a 50 per cent stake in the Italy-based Teme group to control 75 per cent of the world's stainless steel fabrication business. The group plans to increase its control of the business to 90 per cent eventually.