China Steel Corp (中鋼) yesterday signed a syndicated loan of C$278.34 million (US$265 million) with 12 banks, as the nation’s only integrated steelmaker plans to use the money to finance its raw material investments.
The company expects such investments to increase its raw materials self-sufficiency rate to 30 percent by 2015.
In January, China Steel reported a self-sufficiency rate of 11.6 percent in iron ore and 2.9 percent in coal, when the company acquired a 3.68 percent stake in ArcelorMittal Mines Canada Inc’s (AMMC) iron ore mining.
The syndicated loan was led by Bank of Taiwan (台灣銀行), Chinatrust Commercial Bank (中國信託商銀) and Taipei Fubon Commercial Bank (台北富邦銀行), according to Bank of Taiwan.
“The completion of the deal will enable China Steel to secure sufficient funds and raw materials, increasing the company’s competitiveness in upstream steel industry,” the company said in a statement.
China Steel chairman Tsou Jou-chi (鄒若齊) told shareholders at the annual general meeting on June 19 that the company would spend NT$22 billion in capital expenditure and NT$38.3 billion in overseas investment this year.
The company’s capital expenditure is expected to decline next year as the expansion project for its Dragon Steel Corp (中龍) unit finishes and the company has no further large capital spending plans for next year.
While the company expects iron ore prices to be weak in the remainder of the year, while coal prices remains stable, its near-term outlook is clouded by oversupply in China and new competition from steel mills in Vietnam, the company said earlier.
In the first five months of the year, the company registered a pretax profit of NT$10.64 billion, 12 times as much as the NT$786.28 million posted a year ago, the company’s stock exchange filing showed.
In related news, the Taiwan Steel & Iron Industries Association (台灣鋼鐵同業公會) said yesterday that the government should urge China to lower its tariffs on Taiwanese steel imports and stop tax refunds for Chinese steel exports before Taiwan decides whether to liberalize steel imports from China.
The association’s comment comes after the government announced it is considering to allow 200 items of steel products from China to be exempt from taxation.
In a press release, the association said that after the government signed the Economic Cooperation Framework Agreement (ECFA) with China in June 2010, 34 items of Taiwan’s steel products exported to China enjoy lower import taxes ranging from 3 percent to 8 percent, but there are 100 items of steel products imported from China that are exempt from taxes.
Furthermore, the association said the Chinese government provides tax refunds for steel exports, which puts steel companies overseas at a disadvantage.
The government should implement the necessary measures to counteract the tax refund in China, just as some Southeast Asian countries, the association said.