Taking the road less traveled for growth

"It has been a tough time for steel companies," he said. "Hebei's overseas steel plant will not only help internationalize its production capacity, but also transfer market pressure."

The African move is also the culmination of the company's long-cherished plans of expanding in overseas markets.

The Tangshan-based company already owns iron-ore and copper mining assets in South Africa. It has also purchased a 74.5 percent stake in a South African mining company. Upon the completion of the transaction, Hebei Iron &Steel will operate and manage Palabora Mining Co Ltd as its largest shareholder. The company hopes to capitalize on PMC's copper resources to generate annual revenue of about $10 billion from South Africa in three years.

PMC is a South African miner that Hebei Iron &Steel acquired from Rio Tinto Plc in August 2013. Meanwhile, the company is also looking to further bolster its global distribution network.

Close on the heels of inking the deal for the 5 million ton steel mill in Beijing, the company said it would take a controlling stake of 51 to 52 percent in Swiss-based steel trader Duferco for about $400 million, a deal expected to be signed later this year.

The move, experts said, would give the Chinese company easier access to global steel resources and further boost its exports.

Peng Zhaofeng, general manager of Hebei Iron &Steel, said during a recent economic forum: "Duferco has a global network covering the iron and steel market in South Africa, and it can help us expand in the overseas market".

But experts cautioned that China's steel ventures abroad have never been easy with many steelmakers' overseas projects either folding or running up huge losses.

Mi said that despite a booming steel market with high growth potential in South Africa, which accounts for more than half of Africa's crude steel production, it is a bumpy road ahead.

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