COMMENT Anshan Steel gets smart with SDCO investment

May 27, 2010 | 12:06 PM |

China's latest investment in a U.S. steelmaker, in the form of Anshan Iron & Steel Group's backing for John Correnti's new venture, has been widely criticized by the domestic industry. But for Anshan, it could turn out to be a smart move that shows Chinese producers are finally learning how to play the international investment game.

Anshan's decision to fund Steel Development Co. LLC (SDCO) bears some similarities to other recent overseas Chinese investments, as well as having one key difference.

Over the past six years, particularly since the 2008 financial crash, state-owned Chinese companies have actively expanded into the global metals markets. A large part of that expansion has been in the developing world, notably in Africa, where Chinese mining and engineering companies are pouring cash into exploration, production and infrastructure projects, often outbidding Western rivals in the process.

But some investment has taken place in North America. Pipe maker Tianjin Pipe (Group) Corp. said it is moving ahead with plans for a $1-billion seamless pipe mill in Texas, while in the past year Wuhan Iron & Steel (Group) Corp. has bought a $240-million stake in Canadian iron ore miner Consolidated Thompson Iron Mines Ltd., and Jinchuan Group Ltd. has made a friendly Canadian $150-million ($142.3-million) takeover bid for Toronto-based nickel junior Crowflight Minerals Inc.....