China Steel Corp (中鋼), the nation’s biggest steelmaker, has decided to spend NT$2.64 billion (US$86.6 million) to upgrade sintering equipment and expand ladle furnaces as the company is targeting the automobile steel business, while striving for better operational efficiency with lower costs.
The Kaohsiung-based company said yesterday its board had approved the capital spending plans, which will start next year and will be completed in 2013, according to an e-mailed company statement.
China Steel said the sintering equipment upgrades at its No. 3 and No. 4 blast furnaces would cost the company NT$1.55 billion. This project will be undertaken between January next year and December 2013, the company said.
As for the ladle furnace expansions, the company said it planned to budget NT$1.09 billion on the project over a 30 month period ending in June 2013.
“The project will help improve the company’s high-grade steel refining yield and enhance our ability to refine high-intensity steel used in automobiles,” the company said in the statement, “It also helps reduce production costs, while maintaining operational stability.”
The company’s focus on automobile steel came as Taiwan and China signed a trade pact in late June, which is expected to increase trade and partnership between automakers in both countries and therefore raise potential demand for such steel products.
However, analysts have warned that a sharp increase in capital expenditure could also mean lower cash dividend payouts to shareholders.
China Steel posted NT$41.68 billion in pretax profits during the first 11 months of the year, the company said on Dec. 3.
Based on the 15.32 billion shares the firm has in issue, earnings per share were NT$2.72 in the first 11 months.
Revenue totaled NT$219.54 billion over the same period, up 48.90 percent from NT$147.44 billion last year.