Tangsteel, Siemens plan to unite on-energy-saving cooperation venture

A corner of a Tangsteel auto steel plate mill in Hebei province. Tangsteel plans to increase its non-steel business from the current 20 percent among the whole business structure to 50 percent in five years to cope with problems such as falling prices of steel products, stricter emission standards of production and severe overcapacity in China. ZHENG YONG/CHINA DAILY

Tangshan Iron and Steel Group Co, or Tangsteel, signed a strategic cooperation framework agreement on Thursday with German technology giant Siemens Ltd on an energy-saving and environmental protection cooperation, a step by the Chinese company to further develop its non-steel business.

Facing a drop in prices for steel products, stricter production emissions standards and a severe overcapacity problem in China, many steel companies are seeking opportunities in non-steel sectors that can help build profits.

Wang Lanyu, president of Tangsteel, told China Daily that the company plans to increase its non-steel business from its current 20 percent of the whole business structure to 50 percent within five years.

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"It is the first energy cooperative project between Tangsteel and a foreign company," said Wang. "Siemens will bring advanced technology to us. More importantly, it can provide a channel for Tangsteel to export our technology and services in the energy sector, which will bring huge economic value to the companies."

Using Siemens' technology, Tangsteel will manufacture energy-saving and carbon-emission reduction equipment for steel mills, Wang said.

"Tangsteel has a wide network in China's steel industry, which is helpful for marketing this equipment in the future," he said.

Jan Lueder, general manager of Siemens China's Metals Technologies of the Industry Sector, said the details of the cooperation are still under discussion but will be hammered out by the end of the year.

"Tangsteel is leading the industry in green development, and it has knowledge about China, which can contribute to our cooperation," Lueder said.

Zhang Tieshan, a senior analyst with steel information provider mysteel.com, said an increasing number of Chinese steel companies are delving into the real estate, finance, manufacturing and even robotics sectors because most are losing money.

He said it is a workable way to enter the energy-saving industry for Tangsteel and Siemens because there is such demand from steel mills.

"The steel companies cannot stop production, which would cost them even more than to keep running," Zhang said. "The only obstacle will be if the steel mills don't have enough money to buy the energy-saving and environmental-protection equipment for their plants."

"Many steel companies are facing deficits. It is hard for them to invest in such equipment if there is no strict requirement from the government," he added.

According to Tangsteel, the company has an annual output of approximately 20 million metric tons. In 2013, the company exported about 3 million tons of steel products and is expected to raise that number to 4 million tons this year.