Hong Kong-based conglomerate CITIC Pacific aims to double its production capacity of steel through acquisitions and refined technologies.

At the company's annual general meeting yesterday, management of CITIC Pacific said that the company will strive to maintain its leading position as the mainland's largest special steel manufacturer.

Special steel is used in high-intensity steel products used in products such as automobiles.

To bolster the capacity of its existing special steel projects, CITIC Pacific announced that it has set up a separate company to consolidate the management of the three special steel factories currently under the group.

"The new organization will oversee the management of our special steel factories in Jiangyin, Huangshi and Shijiazhuang," Chairman Larry Yung Chi-kin said.

The Beijing-backed company took in HK$2.2 billion in profits from its special steel business last year.

CITIC Pacific's Deputy Managing Director Peter Lee Chung-hing said the current combined capacity of the three special steel factories is 7 million tons a year.

"In the long term, we hope to increase that number to 15 million tons a year," Lee said.

He said that the group will increase its output by utilizing better technologies. However, to further expand the group's market share, Lee said CITIC Pacific might consider acquisitions.

Northeast Special Steel and Baosteel are the major competitors of CITIC Pacific in the mainland's special steel industry.

Other than steel, iron ore mining and mainland property are also among the diverse range of businesses under CITIC Pacific. Yung said he is optimistic that the firm's metal sector will see positive developments this year.

The recent rise in metal prices are beneficial to the profitability of the metal-manufacturing sector.

However, Yung expects the high oil prices to have a detrimental impact on the group's aviation and power-generation businesses.

CITIC Pacific currently holds a 17.5 percent stake in Cathay Pacific Airways and a 10 percent stake in Hong Kong Air Cargo Terminals.

Yet Yung hinted that the group might consider selling its 10 percent stake in the air cargo terminal.

"Since Cathay Pacific just got the exclusive rights to run the new air cargo terminal, there might be a conflict of interest," Yung said, referring to the major reason behind the potential sale of the stake.

CITIC Pacific, which announced it booked HK$5 billion in net profits last year, saw its shares dip yesterday in line with the broad market performance.

Shares in the company slipped 0.85 percent, or HK$0.30, to close at HK$34.85 yesterday.

(HK Edition 05/09/2008 page2)