(Updates with steel talks in third paragraph.)
Oct. 13 (Bloomberg) -- Anshan Iron and Steel Group Co., a unit of China’s third-biggest steelmaker, is seeking partners to invest in its first project in India as domestic overcapacity pushes the company to expand overseas.
“The India market has much room to grow,” the Anshan, Liaoning province-based company said in an e-mailed response to Bloomberg questions today. “Nothing has been decided on the scale and investment value of the project yet.”
Anshan is considering a $2 billion steel project in India under a global expansion plan that may include a new plant in an African country, the Financial Times reported, citing President Zhang Xiaogang. Talks have been held on a 2 million to 3 million metric-ton-a-year project in India, the unit of Angang Holding Group Co. said in the e-mail.
Steel consumption in India may climb as much as 9 percent in the next two to three years, Fitch Ratings said in a July 13 report. ArcelorMittal and Posco have $32 billion of planned projects in the eastern states of Orissa and Jharkhand.
India, the third-biggest iron-ore exporter to China, is discouraging some overseas ore sales with higher taxes as domestic steel demand increases. Karnataka, among the nation’s top iron-ore producing regions, in July 2010 banned overseas shipments to retain the raw material for local use.
In China, the government is encouraging steelmakers including Maanshan Iron & Steel Co. to venture overseas because of overcapacity and a shortage of iron ore. Angang Steel Co., the publicly traded unit of Anshan, posted a 91 percent plunge in its first-half earnings because of higher raw-material costs and slowing demand from automakers.
Angang Steel jumped 16 percent to close at HK$5.65 today after UBS AG raised its recommendation on Hong Kong-traded steel stocks to “buy.” Maanshan surged 26 percent to HK$2.31.
--Helen Yuan. With assistance from Abhishek Shanker in Mumbai. Editors: Ryan Woo, John Chacko.
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