BEIJING, Sept. 19, 2012 /PRNewswire-FirstCall/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), one of China's leading non-state-owned producers of steel products and aggregators of domestic steel, today announced its plan to initiate construction on a state-of-the-art, 900,000 metric ton seismic-grade rebar production line at its principal manufacturing facility, Longmen Joint Venture ("Longmen JV"), located in Hancheng City, Shaanxi Province, China. The production line incorporates cutting-edge technology that is expected to reduce rebar production costs by approximately RMB100 per metric ton.
"Through the implementation of new production lines that utilize cutting-edge technology, we are reducing energy consumption and production costs, while improving the quality of rebar we produce. This is consistent with our broader efficiency improvement programs and efforts to optimize our capacity utilization capabilities at Longmen JV," said General Steel's Chairman and Chief Executive Officer Henry Yu. "The launch of this new production line better positions our Company at the high-end of the steel value chain where we can be a standard-bearer for high-quality construction steel products. At the same time, this is an investment in our growth that enables us to meet increasing customer demand, generate sustainable profitability and improve shareholder value."
In 2011, General Steel completed the installation and testing of a one million ton high-speed wire production line and a 1.2 million ton rebar production line, both of which were transferred to the Longmen facility from the Company's Maoming facility to leverage economies of scale. As part of the Company's growth strategy, Longmen JV plans to continue increasing its annual rebar rolling capacity through the installation of additional rebar production lines at its facility. By rolling rebar at the same facility in which steel billet is produced, the Company can eliminate the process of cooling, transporting and re-heating of the steel billet for processing at another location, substantially reducing the costs.
The new production line utilizes Thermo Mechanical Control Process ("TMCP") technology, which enables ultra fine-grain and uniform rebar production that results in steel products with greater strength and durability. Steel that is manufactured using TMCP production is typically less susceptible to cold cracking, is better able to withstand extra high-heat input welding, and meets industry standards for seismic-grade rebar.
"The market for seismic rebar has exploded in recent years following the 2008 Wenchuan Earthquake in the eastern Sichuan province of China. This disaster revealed that enforcement of seismic building codes in rural areas of China was lax. Seismic activities in China are typically high frequency, high magnitude, wide distribution and shallow hypocenter, which make China one of the world's most earthquake-hit countries, and the seismic activities in China are chiefly concentrated in the west region, the primary end market for Longmen JV's rebar and other steel products," Mr. Yu added, "Extensive construction activities in the west region following the recent earthquake in China have increased the use of seismic-grade rebar, which we expect to drive significant demand for our seismic-grade rebar in next few years."
In accordance with China's 12th Five-Year Plan for National, Social and Economic Development, the Chinese government issued a national regulation that requires seismic-grade rebar for new housing and infrastructure construction. To promote this upgrade, by the end of 2015, rebar products with greater strength and durability will be awarded 80% of total rebar production volume in China.
About General Steel Holdings, Inc.
General Steel Holdings, Inc., (NYSE: GSI), headquartered in Beijing, China, operates a diverse portfolio of Chinese steel companies. With 7 million metric tons of crude steel production capacity under management, its companies serve various industries and produce a variety of steel products including rebar, high-speed wire and spiral-weld pipe. General Steel Holdings, Inc. has steel operations in Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality. For more information, please visit www.gshi-steel.com.
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This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under "Risk Factors" and elsewhere, and include: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether the Company is able to manage its planned growth efficiently and operate profitable operations, including whether its management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether the Company is able to generate sufficient revenues or obtain financing to sustain and grow its operations; (d) whether the Company is able to successfully fulfill our primary requirements for cash; and (e) other risks, including those disclosed in the Company's Form 10-K, filed with the SEC. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.
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