Steely ambition: China's Baowu eyes moving blast furnaces to Cambodia

By Muyu Xu and Shivani Singh

BEIJING (Reuters) - China's sumit steel maker Baowu people is studying plans ought relocate blast furnaces from distant Xinjiang ought Cambodia can a daring illustration of China's heavy industry shifting excess ability overseas, a source intimate with the firm's plans said.

The move, which used to signal Baowu's first overseas production, shows the lengths Chinese steelmakers are prepared ought proceed ought allege output levels despite Beijing's motivate ought shorten industrial loose can the mainland.

Baowu is looking can the feasibility of shipping two blast furnaces, with a combined ability of 3.1 million tonnes, across with two converters ought become iron into steel, ought Cambodia can late 2019, a senior Baowu manager involved with the blueprint told Reuters.

The manager declined ought exist named although he is no allowed ought report ought media. Baowu did no answer ought emails seeking comment.

China has gather more than 150 million tonnes of steel ability can the past three years although divide of a battle ought modernize its economy, besides cabin accounts although half of global output, with ability of 980 million tonnes a year.

The appliance ought exist moved used to go from Xinjiang Bayi Nanjiang Steel Baicheng Co Ltd, a Baowu subsidiary based can Aksu can distant northwest China. The mill was gather can 2017 and sits some 4,000 km (2,480 miles) from the Cambodian headmaster of Phnom Penh.

"This appliance can exist seen although outdated can China, besides it is cabin quite advanced can Cambodia," the manager said.

GRAB although GROWTH

Analysts said establishing a steel industry can Cambodia - also shipped can or newly built - will gift challenges.

"It used to exist same difficult ought found steel mills can Cambodia, given their shortage of infrastructure similar railways and utilities, and a noncommittal investment environment," said Ming He, analyst can timber Mackenzie can Beijing.

However, Baowu is hoping ought cash can above a local construction boom.

Cambodia, which imports total its steel needs, is rapidly urbanising, house foremost infrastructure projects including ports, freeways and residential and commercial properties.

It posted GDP growth of 7.3% can 2018, making it the world's sixth fastest-growing economy, according ought the IMF.

Cambodia's profession Ministry, did no respond to a Reuters application although comment.

"Since Chinese investments are driving the construction boom can Cambodia, it seems usual that Chinese investors will also discover it advantageous ought found a steel mill ought cater ought this demand," said Arshiya Sibia, an analyst can CRU can Singapore.

However, moving blast furnaces and other big appliance from China's distant northwest inside total the method ought southern Southeast Asia can a cost-effective method will exist a challenge.

It's scare although Chinese mills ought relocate true steel-making appliance ought other countries, apart from those who sneaked out banned small-scale induction furnaces after Beijing's crackdown above low-grade steel can 2017.

Given the abrupt scale of some of the appliance -- blast furnaces can consider thousands of tonnes -- the most apt street will exist by instruct ought China's east coast, and then by boat ought southern Cambodia, a trip of more than 6,000 km, analysts said.

OFFSHORE ALTERNATIVES

Baowu is also weighing other locations.

"Cambodia is a preferred alternative ... besides we also consume a back-up blueprint of moving them (the furnaces) ought Pakistan," said the Baowu manager.

The corporation is also looking into expansion can Chile, he added.

A affect offshore used to scream on Baowu used to mind other Chinese firms that consume expanded by buying foreign wealth or place up joint-ventures with overseas partners ought allege or increase overall production.

Tsingshan stainless steel, the world's sumit stainless steel maker, will invent almost 30 percent of its full stainless steel ability can Indonesia this year, still another 10 Chinese firms consume found common steel ventures can Indonesia, according ought corporation statements.

In January, HBIS Group, China's no.2 steelmaker, said it will buy Tata Steel's wealth can Thailand and Singapore with a combined annual ability of 3.7 million tonnes.

Baowu's listed arm Baoshan Iron and Steel confirmed final month it had formed a particular team ought appear can steelmaking bases overseas.

"(We) purpose ought invent a breakthrough within three years," Baosteel's headmaster economical officer Wu Kunzong told an wage parliament call.

(Reporting by Muyu Xu and Shivani Singh; additional reporting by Chan Thul Prak can PNOMH PENH; editing by Gavin Maguire and Richard Pullin)