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Citic sets up steel unit in China
By Alex Frew McMillan
HONG KONG, China (CNN) -- Hong Kong conglomerate Citic Pacific Ltd. said Thursday it is setting up a $25 million joint venture to make steel in mainland China. Citic, which is backed by the Chinese government, said its wholly owned Connemara Inc. subsidiary will take a 30.25 percent stake in the joint venture. Jiangsu CP Xingcheng, which is 55 percent owned by Citic, will hold another 45 percent of the venture. The other investor is Jiangyin Steel Mill, which will own 25 percent of the company and already has investments in a number of Citic companies. China is the world's largest importer of steel, recently passing the United States, bringing in 23 million metric tons in the nine months through September this year. That's despite the fact that China also produces more steel than the United States and Japan combined, nearly all of it going to support China's manufacturing and construction boom. Business mix based on infrastructureCitic said in a statement that steel making is a significant investment in its industrial portfolio, and part of its long-term goal of creating a diversified mix of businesses based on infrastructure and industrial manufacturing. The steel joint venture, as yet unnamed, will be a Citic subsidiary itself and have capital of $10 million. Connemara and Jiangsu CP Xingcheng are providing 75 percent of that. In a related deal, Jiangsu CP Xingcheng acquired a 20 percent stake in Special Steel Co. for 220.7 million yuan ($26.7 million). It is buying the stake both from Citic subsidiary Maxy Rich and from Jiangyin Steel Mill. Those three companies will now own Special Steel. Jiangsu CP Xingcheng plans to go public on the Shanghai Stock Exchange in 2003. Meat company saleCitic said earlier this week that its Mainstream Holdings Ltd. subsidiary is selling a 30 percent stake in meat producer Shanghai DCH Shuanghui IBP Co., though it will keep 40 percent of the company. Shenzhen-based Shuanghui Investment & Development Co. is paying 18.7 million yuan ($2.3 million) for the holding, which will leave it with the remaining 60 percent of the meat company. After the steel announcement, stock in Citic is down 0.67 percent to HK$14.85 on Thursday afternoon. That's contributing to a 0.38 slip in the benchmark Hang Seng index. Citic Pacific is the Hong Kong-based publicly traded arm of state-owned China International Trust & Investment Corp. Citic Pacific specializes in infrastructure projects, property development and distribution, in both Hong Kong and mainland China.
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