Sahaviriya to begin blast-furnace project

Last week, it signed a lead-consortium contract for the huge project with Sino-International Heavy Industry Technology (Sino-HIT) in Beijing.

Acting President Win Viriyaprapaikit said total investment over the 15 years it would take to complete the five construction phases of the project would be Bt500 billion. The furnace will have an eventual production capacity of 33 million tonnes of steel.

The company expects to receive an environmental-impact assessment this quarter and believes the project will qualify for Board of Investment tax incentives.

The first phase of construction will begin in this year's fourth quarter be completed around 2010.

The first phase will require investment of Bt90 billion. Of this, Chinese-based Sino-HIT will provide and install Bt50 billion worth of machinery and technology, and Sahaviriya will spend Bt40 billion to develop infrastructure, utilities and a deep-sea port.

Win said the Chinese consortium would provide loans of Bt50 billion to Sahaviriya. However, Sahaviriya had yet to finalise whether it would borrow from Chinese commercial banks or seek support from the Export-Import Bank of China.

He said his company would maintain a debt-to-equity ratio of 2:1 despite delays to the project having cost it billions of baht over the past two years.

On the environmental impact of the huge plant in Bang Saphan, he said the company had explained its plans in detail to local residents, who had now shifted to support it.

"Our contract signing with Sino-HIT requires the use of technology complying with global standards. In addition, we'll employ about 5,000 workers for the project, which will help boost the local standard of living," he said.

Win said Sahaviriya was looking for partners to strengthen its downstream industry but not to invest in the blast furnace.

The company plans to sign trade contracts with three global suppliers of iron ore: Vale from Brazil; and Rio Tinto and BHP from Australia.

The first phase will require about 8 million tonnes of ore. Of this, 70 per cent will be imported from Australia and the rest from Brazil. The contracts will quote selling prices year by year.