Golden Dragon Precise Copper Tube Group Inc, China's top copper
tube maker, plans to build a 120,000-ton plant in Mexico to get
closer to the United States, its main overseas market.
Sources in the company based in Central China's Henan Province
said it will spend $100 million on the tube plant located in
Mexico's copper-rich Coahuila state, which borders the US.
The National Development and Reform Commission, China's top
economic planner, yesterday said it has approved the project's
first stage with a capacity of 60,000 tons.
The plant will kick off production around the end of this year,
the sources said, adding the move, Golden Dragon's first overseas
industrial investment, will help cut costs of its shipments to the
US sharply.
Li Yusheng, an analyst with Antaike Information Development Co,
a metal industry consultancy in Beijing, said: "The project in
Mexico will also enable Golden Dragon to dodge the negative impact
from China's possible tax rebate cuts on copper tube exports."
Mexico is a member of the North American Free Trade Agreement
along with the US and Canada.
Li said China, the world's biggest copper tube producer, will
slash tax rebates on copper tube exports "sooner or later" as part
of its efforts to rein in overseas shipment of resource-intensive
products and the fast-growing trade surplus.
On July 1, the country removed or cut export tax rebates on more
than 2,800 products, such as steel, cement, fertilizer and
garments.
From January to June, China's trade surplus soared by 84 percent
year-on-year to $112.5 billion.
Golden Dragon exported $350 million of copper tubes last year,
up from $160 million in 2005. Its output grew to 180,000 tons from
140,000 tons, with sales revenue doubling to 11 billion yuan.
The plant in Mexico is part of the company's drive to expand its
production capacity to 400,000 tons within five years from the
current 220,000 tons.
The group's chairman, Li Changjie, said earlier that it was also
seeking mergers of domestic and foreign firms to boost
capacity.
"Other Chinese copper tube companies should also speed up
overseas investment as there is excessive production capacity at
home," Antaike's Li said.
Domestic capacity in China amounted to nearly 2 million tons by
the end of 2006, much higher than the real output of 1.1 million
tons in the year, according to data from China Non-Ferrous Metal
Industry Association.
(China Daily July 12 2007)
