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Published on March 19, 2008

G Steel, one of Southeast Asia's largest hot-rolled steelmakers, has reinstated plans to build a mini blast furnace in Rayong province at an estimated cost of more than US$1 billion (Bt31.2 billion).

The project, with a projected production capacity of 2.5 million tonnes per year, will help G Steel reduce the volatility of its raw-material prices and enable it to expand its production of hot-rolled coil.

CEO Somsak Leeswadtrakul said the firm signed a memorandum of understanding on technology transfer yesterday with South Korean steelmaker Dongbu Steel. It is currently negotiating with four steelmakers from India, Russia, Japan and South Korea for a busi-ness partnership. A decision will be made in the next six months.

"The investment outlay will increase 10 per cent, due to rising costs of construction, but we're revising some project details, particularly

its logistics management," he said, adding that extra investment would be needed for the logistics system, in order to ensure that gains were made from increased efficiency.

A Board of Investment source said the company would have to resubmit its application for privileges due to changes in the size of the blast furnace and the possibility of the plant's relocation.

G Steel's earlier applica-tion, made in 2006, involved a blast furnace with a production capacity of 5 million tonnes a year.

The company's annual revenue is expected to triple from Bt22 billion last year to Bt60 billion in 2010. It has already spent Bt10 billion to debottleneck its process, and this should be completed next year, boosting its capacity from 1.8 million tonnes a year to 3.4 million.

Globlex Securities estimates the company's net profit this year will rise 68 per cent year on year, because of skyrocketing prices for steel sheet and its long-term stock of raw material.

The broker believes the steelmaker's revenue will rise 40.66 per cent to Bt31 billion this year on sales volume of 1.17 million tonnes, while its net profit should surge 67.9 per cent year on year to Bt2.61 billion. Its foreign-exchange gains should be about Bt500 million this year.

Chalida Ekvitthayavechnukul

The Nation