Baosteel Bought Shares of Zhanjiang Port Group

On July 15, the Ministry of Commerce issued "the approval about increasing investment and expanding shares of Zhanjiang Port (Group) Co., Ltd.", which agreed Baosteel to buy 8% shares of Zhanjiang Port (Group) Co., Ltd. and become its third shareholder. It is another powerful measure to drive Zhanjiang Steel & Iron Base Project construction, following Baosteel's presence in Guangdong Iron & Steel Group Corporation.

Zhanjiang port is located in the west of Guangdong province and opened in 1956. It is the most important sea gate in Southwest China and the western area of Guangdong province. It is listed as the leading port in the southeastern area in "China National Coastal Ports Arrangement & Planning" publicized by the Ministry of Transport.

The waterway in Zhanjiang port is 40m deep and there are over 180 berths in total, including 30 berths with over 10,000 tonnage. The major bulks for iron ore and petroleum occupies approx. 80% of its total business amount. It is the largest port of loading & unloading iron ore and petroleum to the south of Ningbo, as well as the nearest Chinese port to the iron ore exporting area in Australia.

Zhanjiang Port (Group) Co., Ltd. is the largest public wharf operator in Zhanjiang Port and possesses 39 production berths including 26 berths with over 10,000 tonnage as well as 250,000 tonnage deep waterway, 300,000 tonnage crude oil terminal and 200,000 tonnage iron ore terminal. Its actual throughput is over 50 million tons and the stacking capacity at one time exceeds 5 million tons.

And it can provide the relative transportation and logistic services, such as loading & unloading at the port, storage, transshipment, agency, etc. In 2006, Zhanjiang Port (Group) Co., Ltd. totally completed 50.08 million tons of cargo throughput.

In June this year, Guangdong Iron & Steel Group Corporation was established with the joint investment by Baosteel, State-owned Assets Supervision and Administration Commission (SASAC) of Guangdong Province and SASAC of Guangzhou City. The preparatory work of Guangdong Zhanjiang Iron & Steel Base Project was also approved by National Development and Reform Commission.

Baosteel also invests in Zhanjiang Port to construct a terminal for pellets with 2 berths totally, which is scheduled to put into operation in the first half of next year. Baosteel's participation in Zhanjiang Port (Group) Co., Ltd. by purchasing share has established the stable logistics transportation channel for Zhanjiang Project.

Meanwhile, Zhanjiang project controlled by Baosteel will be conducive to increasing the throughput of Zhanjiang port and achieving win-win.