Believe it or not, Zhangjiagang-based Jiangsu Shagang Group bought the entire steel mill in Dortmund from Thyssen Krupp Stahl AG.

About 80 thousand tons of the most useful parts are being sent to Zhangjiagang to rebuild a production line which will have an output capacity of 2 million tons of high-quality hot-rolled steel per year.

The project, which involves dismantling and relocating 250 thousand tons of equipment in total, is one of the biggest of its kind anywhere in the world.

The disassembly of the whole Dortmund steel mill has been split into several segments. The complete dismantling is being handled in accordance with German laws and regulations by Chinese experts, who are also in charge of the recommissioning in China. The work is scheduled for completion in December 2003.

According to Zhang Qingping, project director for Shagang, their workers began to break earth for the production line in Zhangjiagan on December 28, 2001.

Thus far, almost 90 per cent of the Dortmund facilities earmarked for use have been dismantled, and about 50 per cent of the needed facilities have already been sent to Shagang by boat. More than 50 per cent of the facilities that won't be reused will be melted down and sold as scrap in Germany.

Zhang predicted that the work of dismantling the most useful parts will be completed in January 2003, and transport of those parts will be finished in March 2003.

But the German facilities need to be significantly reworked to be suited to production conditions in China, such as in electricity and water supply, emphasized Zhang.

"The first assembly stage of the production line will be achieved by the end of 2003 when iron and steel will be produced. And at the end of 2004 when steel products are manufactured, the whole project will be completely finished," he said.

Experts estimate that the reuse of the German facilities has saved almost 40 to 50 per cent in investment costs and has greatly increased the technological capacity of Shagang, which can be used as a reference by other steel companies in the country.

"The whole investment for this production line is 12 billion yuan (US$1.45 billion), including the 200 million yuan (US$24 million) we spent to buy the Dortmund steel mill, 100 million yuan (US$12 million) for transportation, and more than 10 billion yuan (US$1.2 billion) for the reconstruction and the 1.3 square kilometres of land we bought for the factory buildings," Zhang said.

"We would have spent more than double that whole investment if we had totally depended on our own strength to build such a production line," he said.

Gao Wenping, the president's assistant and an economist at Shagang, said that the introduction of the hot-rolled steel production line would bring great benefits to Shagang.

"The biggest advantage is that it can help increase the variety of our products. We now produce steel sticks, wires and some boards. With the new production line, we can manufacture the most advanced hot-rolled steel in China," he said.

By buying the Dortmund facilities, Shagang aims to share in the growth of flat steel demand in China, which is today partly met by imports. After the full reinstallation of the facilities, capacity is expected to increase by about 4 million tons.

Statistics show that 30 per cent of the steel products that China imports from foreign countries are hot-rolled steel. And in the international steel industry, a trend has emerged of replacing cold-rolled steel with hot-rolled steel to save on costs.

Shagang began to import advanced facilities from foreign countries like Britain, Germany, Switzerland, the United States and the Republic of Korea as early as the late 1980s, Gao said.

"This is one of the most important reasons we were able to develop so quickly from a very small factory in 1984 to the biggest production base for electric (furnace) steel in the country today," he added.

"Our goal is to produce 10 million tons of iron, 10 million tons of steel and 10 million tons of steel products in the year 2010, ranking us as the fifth biggest steel company in China and among the top-20 in the world.

The German company sold all the Dortmund facilities to Shagang in early 2001.

The main agreement, negotiated by Liu Jian, vice-president of Shangang and Thyssen Mannesmann Handel, representative of the German side, was signed in Zhangjiagang on October 28, 2001.

Shagang bought all the disused metallurgical facilities in Dortmund, for example, the sinter plant and blast furnace at the Westfalenhutte mill, a plant in Horde, plus the wide-hot-strip mill.

When the agreement was signed, both Chinese and German people were shocked.

"I remembered that German newspapers wrote many stories about it at the time," said Zhang, the project director, who took part in the negotiations. "After all, it was the first time either country had made such a deal for a whole steel mill, and it is also rare in the world," Zhang added.

Handel's first contact with Shagang was in 1999 in connection with planned investments in rolling mills.

As Dortmund was changing from an industrial city into a tourist city, its steel mill was closed in the spring of 2001. After the closure, concrete negotiations on the purchase of the facility were resumed.

A letter of intent was signed in June 2001. Subsequently, detailed discussions on the scope of the purchase took place between specialists from Shagang and the German partner.

Three groups of people, including executives, specialists and engineers, were sent to Dortmund from Shagang during the negotiation.

Handel then drafted the signature-ready agreements in a very short time for a project of this scale. The expertise of Shagang played a decisive part.

Shagang is mainly engaged in the manufacture of long steel products and wire. Total 2002 sales are predicted to be 14 billion yuan (US$1.69 billion).

Thyssen Krupp is the largest company of the Business Unit of Carbon Steel, which has its headquarters in Duisburg and employs some 21,000 people to make its flat steel products.