Krupp Stainless Steel Mill
Krupp Stainless Steel Mill
The Shanghai Krupp Stainless steel project is one of the largest steel mill financings in China to date. It has a strong sponsor backing from the joint venture of ThyssenKrupp (60%) and Baosteel through its subsidiary Shanghai Pudong Iron & Steel (40%) and will cost in the region of $4.4 billion to develop. It is hoped the project will reduce China's dependence on steel imports.
The World's Bank's IFC and German bank KfW, together with five Chinese Agricultural Bank of China, Bank of China, ADB, China Construction Bank and ICBB. Debt amounts to about $1.43 billion, split between a KfW/IFC tranche and the Chinese banks' tranche.
The project started rolling in 1998 after Krupp and Baosteel formed their joint venture. It is just coming to close now. The ties between a German and Chinese enterprise have paved the way for more relations. It has been heralded as a symbol of the speed of Chinese development.
Ralf Kreuser, manager of the project for Krupp, says: ?China has a traditionally strong import market for steel. There is very little local production and stainless steel is expensive so there is a lot of spend for imports.
?Our target is to replace exports from European facilities by local production ? our philosophy is to follow our customers into new markets. China is the fastest growing market of all markets in the world, and it has the largest stainless steel market in the world.?
As with the other Chinese deals from last year, the combination of domestic and international lenders is promising for future project financing. Shanghai Krupp Stainless, according to those who worked on the deal, will forge better relations for the industry and a strong blueprint for future deal. It is ThyssenKrupp's biggest project financing in Asia to date.
The volume of the financing will be implemented in four phases throughout the project. The first phase is thought to be about £295 million. Kreuser says: ?From our point of view, it's important to have strong financing partners. IFC and KfW are involved in phase I. In phase II, IFC is not participating?. There was no room for the IFC and it couldn't compete with the commercial banks, so KfW (involved as equipment for the project is German) was in with the Chinese banks.
Output will be several cold rolled stainless steel products and the yearly production should reach about 440,000 tonnes by the end of 2006. In comparison China's overall demand for steel is about 1.6 million tonnes per year.
Shanghai Krupp Stainless Company
Status: Underwritten, close expected shortly
Location: Huangpu River, Shanghai
Size: $4.4 billion
Sponsors: ThyssenKrupp and Shanghai Baosteel Corporation (Baosteel)
Debt: $1.4 billion
Arrangers: KfW, IFC, Agricultural Bank of China, Bank of China, ADB, China Construction Bank and ICBB.
Lawyers to the sponsors: Clifford Chance
Lawyers to the lenders: Freshfields
Contractor: ABB
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The Shanghai Krupp Stainless steel project is one of the largest steel mill financings in China to date. It has a strong sponsor backing from the joint venture of ThyssenKrupp (60%) and Baosteel through its subsidiary Shanghai Pudong Iron & Steel (40%) and will cost in the region of $4.4 billion to develop. It is hoped the project will reduce China's dependence on steel imports.
The World's Bank's IFC and German bank KfW, together with five Chinese Agricultural Bank of China, Bank of China, ADB, China Construction Bank and ICBB. Debt amounts to about $1.43 billion, split between a KfW/IFC tranche and the Chinese banks' tranche.
The project started rolling in 1998 after Krupp and Baosteel formed their joint venture. It is just coming to close now. The ties between a German and Chinese enterprise have paved the way for more relations. It has been heralded as a symbol of the speed of Chinese development.
Ralf Kreuser, manager of the project for Krupp, says: ?China has a traditionally strong import market for steel. There is very little local production and stainless steel is expensive so there is a lot of spend for imports.
?Our target is to replace exports from European facilities by local production ? our philosophy is to follow our customers into new markets. China is the fastest growing market of all markets in the world, and it has the largest stainless steel market in the world.?
As with the other Chinese deals from last year, the combination of domestic and international lenders is promising for future project financing. Shanghai Krupp Stainless, according to those who worked on the deal, will forge better relations for the industry and a strong blueprint for future deal. It is ThyssenKrupp's biggest project financing in Asia to date.
The volume of the financing will be implemented in four phases throughout the project. The first phase is thought to be about £295 million. Kreuser says: ?From our point of view, it's important to have strong financing partners. IFC and KfW are involved in phase I. In phase II, IFC is not participating?. There was no room for the IFC and it couldn't compete with the commercial banks, so KfW (involved as equipment for the project is German) was in with the Chinese banks.
Output will be several cold rolled stainless steel products and the yearly production should reach about 440,000 tonnes by the end of 2006. In comparison China's overall demand for steel is about 1.6 million tonnes per year.
Shanghai Krupp Stainless Company
Status: Underwritten, close expected shortly
Location: Huangpu River, Shanghai
Size: $4.4 billion
Sponsors: ThyssenKrupp and Shanghai Baosteel Corporation (Baosteel)
Debt: $1.4 billion
Arrangers: KfW, IFC, Agricultural Bank of China, Bank of China, ADB, China Construction Bank and ICBB.
Lawyers to the sponsors: Clifford Chance
Lawyers to the lenders: Freshfields
Contractor: ABB
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