Angang plans to build 22.6b yuan steel plant in Liaoning

Angang New Steel, the listed unit of China's second-largest steelmaker, plans to invest 22.6 billion yuan to build a steel production plant in northeastern Liaoning province to improve its product mix.

Angang said it planned to invest eight billion yuan in the project this year, 12 billion yuan next year and 2.6 billion yuan in 2008.

The project has been approved by the National Development and Reform Commission, China's top economic planner.

'We haven't worked out a concrete plan on how to fund the project,' Angang's executive director and secretary to the board Fu Jihui said, adding that it could be financed by the company's internal resources, bank loans and 'other appropriate financing activities'.

Angang is adding capacity to tap growing demand for the metal to make cars, ships, machinery and consumer products as the country's economy continues to soar.

Demand for medium and heavy plate in China is estimated to reach 45 million tonnes by 2010 from 31.4 million tonnes last year, while demand for cold rolled sheets will increase to 32 million tonnes by 2010 from 21.9 million tonnes last year, according to Angang's statement.

Analysts said the heavy expenditure for the project would probably raise Angang's debt level as the company's capital had been depleted by the acquisition of its parent's assets earlier this year.