Atlas eyes steel plant in China

Atlas Consolidated and Mining Development Corp. (ACMDC) plans to acquire an integrated steel plant in Guangxi province in China through Berong Nickel Corp., the company said yesterday. 

In a disclosure to the Philippine Stock Exchange, ACMDC said Berong will conduct a due diligence study  over the next six months prior to acquiring the assets, consisting mainly of a three-year old steel plant producing hot rolled steel bars and billets for the domestic Chinese market. 

Berong, which operates nickel mine sites in Palawan, is a joint venture among ACMDC, London-based Toledo Mining Corp. and Investika Ltd. of Australia. 

The facilities include three blast furnaces, sintering machines, residual heat power plant, oxygen plant, railway access, wharf access and land.      ACMDC did not disclose say how much it would purchase the plant. Berong plans to convert part or all of the steel plant for the production of nickel pig iron and stainless steel. 

The plant is estimated to require 1.2 million tons of nickel laterite ore feedstock per year.    

ACMDC said the joint venture partners intend to enter into a long-term contract to supply all the plant’s feedstock requirements on prevailing commercial terms. 

ACMDC executive vice-president and chief finance officer Martin Buckingham said Berong intends to put up a similar steel plant in the Philippines.      

“By upgrading ore mined, the market will reward us with higher pay-rate on the contained nickel. Also, the intial entry into China allows us to readily assess the cost structure and environmental performance of the integrated steel operations as well as the nickel pig iron technology,” Buckingham said.     

Berong earlier signed a five-year contract to supply a minimum of 500,000 wet metric tons of nickel ore per year to Queensland Nickel Pty. Ltd., a unit of BHP Billiton, one of the world’s largest mining company.       

“The market for nickel pig iron and stainless steel remains firm and the pricing structure more attractive than (the sole) supply (of) laterite ore to the market,” ACMDC said.       

Berong commenced direct nickel ore shipments in February this year from its project in Palawan, which has an estimated resource of 275 million dry tons.