Baosteel Group, China's largest steelmaker, started work Tuesday on a Yuan 6 billion ($750 million) facility to produce special steel, China Daily reported Wednesday. The project, the group's largest investment in special steel, would be China's only large-scale special steel production line.

Xie Wei, general manager of Baosteel's special steel branch, said Tuesday that the high-end alloy steel project was part of Baosteel's efforts to build itself into a world leading research and production base for special steel. The project also reflected Baosteel's commitment to turning out more value-added steel products, as outlined in the Five-Year Plan period from 2006 to 2010, Xie added.

The alloy steel project is expected to produce 360,000 mt/year of steel plate and coil once it is completed in May 2009. The special steel products are expected to bring in around Yuan 8.3 billion/year to the group.

Xie said these high-intensity steel products were designed for the emerging needs of industries such as aerospace, nuclear power, and oil and gas prospecting.

Jia Liangqun, an analyst at industry portal Mysteel.com, described the project as "forward-looking." He said: "China is now going all out to manufacture large and more technology-intensive equipment, which requires abundant steel with special features."

A 1 million kilowatt nuclear power unit, for instance, requires about 2,110 mt of alloy steel, which includes high-temperature alloy, titanium alloy and special stainless steel. China now has 11 nuclear power stations with a total capacity of 8,700 MW.

According to a national plan unveiled in 2004, China would build another 40 nuclear power units by 2020. It also plans to help Pakistan build six 300 MW nuclear power stations.

Oil and gas prospecting, which usually requires high-intensity steel pipelines and drills, is also a big consumer of alloy steel.

Alloy steel is currently still a fledging product in China, and is mainly imported.

Baosteel plans to achieve a capacity of 30 million mt/year of steel during its eleventh Five-Year Plan, ending 2010. Such an expansion would make the company one of the top three steelmakers in the world. In 2005, Baosteel turned out 22.73 million mt of steel and reported Yuan 167.1 billion in sales.