BEIJING, May 19 -- Anshan Iron and Steel Group Corp (Angang), China's fourth-largest steelmaker, said on Monday that it has signed a memorandum of understanding (MOU) with US mill Steel Development Company (SDC) to gain a stake in SDC's deformed steel bar plant, making it the first Chinese company to invest in a US steel mill.
The joint-venture plant will be located in Amory, Mississippi, Angang said on its website, noting that the MOU was inked on May 13 in New York, without providing any financial details.
Angang and Japan's Marubeni Corp will sell the plant's products in the southeastern United States, the statement said.
Investment firms such as Jefferies, Goldman Sachs, SAC and Highline have expressed an interest in the project, it said.
Angang will select one or two staff to join the joint-venture plant's executive board and be involved in daily management.
The company plans to learn electro-smelting techniques from SDC to reduce energy consumption.
The two sides are still discussing the volume of investment and their respective equities in the joint venture, according to Xinhua News Agency.
Angang said the deal would bolster steel supplies in the American construction market, which is in short supply and being spurred on by the US stimulus package. The US government is requiring that locally produced steel should be used.
Established in October 2008, SDC is a new participant with its first greenfield plant under construction in Amory.
The American company plans to build four deformed steel bar manufacturing plants and one electrical steel mill locally.
The new plant will begin production in the middle of this year, with an annual capacity of 300,000 tons, SDC said on its website.
The plant will be the most advanced, efficient and mechanically optimized facility in the world for producing rebar and merchant rebounds, the company said.
"It is in line with Angang's overseas expansion strategy and the ambition to be involved in global competition in terms of high-end technology," said Li Xinchuang, president of China Metallurgical Industry Planning & Research Institute.
The deal is now pending approval from the Ministry of Commerce. Yao Jian, the ministry's spokesperson, said on Monday that the government would support Chinese investments overseas.
Wuhan Iron and Steel Group said in last December that it agreed to build a 5-million-ton steel plant in Brazil with EBX.
China's largest steel producer Baosteel and Brazilian mining giant Vale had earlier planned to build a steel mill in Brazil, but deferred the plan in March as global steel demand slumped and steel mills started cutting existing output.