Chinese Bishi plans to build a ship steel plant in Primorsky Krai with a capacity of 1 million tons

Hebei Bishi is ready to provide steel super steel.
Chinese Bishi plans to build a ship steel plant in Primorsky Krai with a capacity of 1 million tons, which is three times higher than the actual needs of Russian shipyards. The authorities of the region indicate that the plant is needed primarily for the "Zvezda" superstructure under construction, which is to annually consume up to 330,000 tons of steel. The main shareholder of Zvezda Rosneft itself is nurturing the idea of ​​building a metallurgical plant for the shipyard and is preparing a feasibility study, but "potentially ready to consider cooperation."

The Chinese private Hebei Bishi Industry Group is ready to build a shipyard production plant in Primorye for 1 million tons per year, the administration of the region said after a meeting between the interim governor Andrei Tarasenko and the head of the board of directors Hebei Bishi, Bi Jinan. Construction can take five years, the company is ready to expand the range of the plant, as well as build a coke plant and a power plant in the province - total investment in the project is estimated at $ 1-1.5 billion. Of the 10,000 jobs, 80% promise to give to local residents.

Andrei Tarasenko said that the region "is interested in the opening of such production, since the largest in the country shipyard Zvezda is being built on the territory of the region." "We need wide ship steel, now we are purchasing material in South Korea," he said. According to the administration of the region, Hebei Bishi annually pays 6.8 million tons of steel, 3 million tons of coke, owns assets of 18 billion yuan ($ 2.7 billion).

Zvezda is building a consortium of Rosneft, Rosneftegaz and GPB (75%), and 25% from the United Shipbuilding Corporation. Head of Rosneft Igor Sechin since 2016 repeatedly appealed to Vladimir Putin on the creation of favorable conditions for the construction of a metallurgical complex that would provide the "Star" with ship steel. The needs of the shipyard were estimated at 330,000 tons per year, but, as Kommersant wrote on July 3, the portfolio of its orders until 2035 was reduced to 118 vessels from 178. It was said that Rosneft created a joint venture with UMMC Iskandar Mahmudov for the steel project and partners - Eastern Mining and Metallurgical Company (it can not be found in the USRLE).

Rosneft was told by Kommersant that the project of the metallurgical complex for Zvezda is being implemented according to the approved plan, now a feasibility study is being prepared. The company also "considers all cost-effective options for providing the" Star "with steel products and is potentially ready to consider options for cooperation." The UMMC declined to comment.

According to Mikhail Burmistrov, head of Infoline Analytics, the volume of consumption of ship steel in 2015-2017 in the Russian Federation was about 300 thousand tons per year, in 2018 consumption will grow by no less than 20% due to state support of shipbuilding. But the projects of plants with a focus on ship steel do not have economic sense, the expert believes. According to him, localization of production in the Far East makes sense if the nomenclature is expanded and the capacities can compete with MMK and Severstal for ship steel (they delivered 93,000 tons and 51,000 tons respectively in 2017) and with Amurmetal for a simpler assortment.

Boris Krasnozhenov of Alfa Bank reminds that China already partially transfers heavy industry abroad to solve environmental problems, and Hebei Bishi's plans, as well as the announced by the Chinese investors led by Hebei Luanhe Group, large-scale plans for the development of Amurmetal, may be dictated this. If Hebei Bishi builds a plant in Primorye, then for the production of high-quality ship steel, a converter-steel smelting is needed, the analyst continues, but there should be no problems with raw materials, and iron ore can be supplied from the Amur Region and the Jewish Autonomous Region by IRC (the main shareholders are the gold-mining Petropavlovsk , Chinese General Nice and Tiger Capital). The prime cost of steel smelting in Russia is lower than in China, South Korea and Japan (according to CRU, in the Russian Federation an average of about $ 360 per tonne), so the plant in Primorye will be able to export excess volumes, including to Chinese shipyards, Mr. Krasnozhenov believes. But the lobby of metallurgists "Russian Steel" opposes the state support for the creation of excess capacity, in particular, in the Far East.