Chinese firm eyes steel mill

A worker at a steel mill in Hefei, eastern China, in 2010. AFP

One of China’s largest steelmakers is seeking partners in Cambodia to build a steel mill that will reduce the Kingdom’s dependency on imported steel for its construction sector, a company executive said.

Weng Wei Min, director of the economic cooperation department at Hangzhou Iron and Steel Group, said on Thursday on the sidelines of the Cambodia-China Business Forum that his company was looking to tap into the current construction boom by building the Kingdom’s first steel plant.

“Cambodia is enjoying a period of rapid development, and with that comes the need for iron and steel, whether for the construction of roads, bridges or houses,” he explained.

“Cambodia doesn’t have its own iron and steel factory, so large amounts of iron and steel have to be imported from overseas.”

Weng said Hangzhou Iron and Steel, a state enterprise with $10 billion in assets and over 50 years’ experience in steel manufacture, was looking to expand its business overseas and bring in its advanced technology.

“Right now, we’re looking out for deals and partners to sell our technology to Cambodia, and jointly build a steel mill,” he said.

“We can also invest in shares and participate in the establishment of steel mills in Cambodia.”

He said the company was favouring a location near Phnom Penh, but admitted the project could face significant hurdles given Cambodia’s limited port resources and logistics networks.

“We believe that the demand for a steel mill will be very high in the future,” Weng said.

“We can’t confirm yet that a steel mill will be built here . . . but the reason we’re paying so much attention to Cambodia is because we feel it’s a place that’s worth looking for opportunities for collaboration.”

Cambodia imported over 265,000 tonnes of steel last year, mostly from Vietnam and China.

Hort Pheng, director of the industrial affairs department at the Ministry of Industry and Handicraft, said local steel production would benefit Cambodia in a number of ways.

“If we can produce steel here it would provide a lot of benefits as we can use our own raw materials,” he said.

“It would also generate national revenue, technical transfer and local jobs, and manufacture steel cheaper than the cost of import.”

Last month, a marketing executive at Sihanoukville Special Economic Zone (SSEZ) indicated that an unnamed Chinese steel company was in talks to set up a plant in the industrial park, providing up to 500 new jobs. It remains unclear whether this was the same firm, or another company.

In 2013, a Phnom Penh-based consortium of Chinese metals firms and China Railway Group inked an agreement to build a 400-kilometre rail line to connect an iron mine in Preah Vihear province to a proposed port and steel mill in Koh Rong province. However, the mysterious $11.2 billion project never got off the ground.

According to Pheng, several companies have submitted requests to Cambodian investment authorities for permission to build steel mills or recycling plants. However, only Guangxi Nonferrous Metals Group (GNMG) has received a license to operate.

In 2012, GNMG announced plans to build a $500 million steel mill in Preah Vihear province, but the project soon stalled. The project was definitively mothballed earlier this year when Chinese regulators ordered the insolvent state-owned enterprise to cease operations and liquidate its assets.

Additional reporting by Cheng Sokhorng