Shen brought in professionals from Voestalpine AG to assess, redesign, and improve the facilities. Taking just four years and 20 billion yuan (US$2.6 billion) this established an iron and steel making operation turning out 6.5 million tons annually through a continuous casting and rolling process. Earlier estimates for establishing a production line on this scale had been put at eight years and 30 billion yuan (US$4 billion).
James Kynge is a former China Bureau Chief at the Financial Times. In his bestseller entitled China Shakes the World he wrote that Horde on the Ruhr had become one of the first communities on earth to feel the convulsive force of a rising China.
The acquisition rapidly raised steel production at Shagang to 10 million tons and changed its product base. Previously it had concentrated on bars, rods, wire rods and other primary iron and steel products. Shen's leadership has brought technical innovation and seen equipment and facilities improve rapidly to meet international standards.
"Without its own core technologies, Shagang cannot become one of the best steelmakers in the world," Shen said. "Though our production capacity is now approaching that of South Korea, our research and development (R&D) capabilities still lag far behind our Korean counterparts.
But Shen is not a man to give in easily. Last year, he decided to spend 500 million yuan (US$66 million) establishing the Shagang Iron and Steel Research Institute in Jiangsu Province. He has invited many internationally renowned professionals to work there. In the future, its Technology Center and postdoctoral programs will focus on introducing new technologies. Meanwhile, the Research Institute will concentrate on the innovative and advanced technologies necessary to maintain a competitive position.
Shagang is located in the southern Jiangsu where land is highly priced. It is not feasible for the company to further expand its production there because of limited land resources and environmental considerations. The steelmaker needs to achieve future development through acquisitions, mergers and reorganizations.
Huaigang has become Shagang's first large-scale acquisition in line with its strategy of continual, rapid, efficient, and sustainable development. As Huaigang is the biggest steelmaker in the northern Jiangsu, this represents a key step taken by Shen to further expand his company. The reorganized company was officially established on December 18, 2006. It will focus on quality and special steels with a production capacity of over 2 million tons. It has become Shagang's base for the production of special steels. With the big bar project introduced to Huaigang from Italy, it is estimated that Huaigang's production capacity of special steel will reach 3 million tons.
