It is reported that Chongqing Iron and Steel Group recently entered into a preliminary agreement with Tianjin Pipe Group to establish a joint venture that will produce steel pipe in southwestern China's Chongqing Municipality.

According to the agreement, Chongqing Steel will buy a 33% stake in the joint venture, which has registered capital of CNY 200 million while state controlled coal miner Zhongliangshan Coal and Power Co Ltd will buy a 17% stake.

According to the report the iron ore development joint venture will construct a 3 million tonnes iron ore mining and selecting facilities as well as a 1.6 million tonnes pellet plant and a 300,000 tonnes coalmine, which together require investment of approximately CNY 1.4 billion and are scheduled to commence production by 2012.

An official with Chongqing Steel Group's press department, surnamed Mr Yu said "Chongqing Steel Group intends to enhance its current weak steel pipe operation through cooperation with Tianjin Pipe Group, China's largest steel pipe producer, while Tianjin Pipe Group is focused on access to the under developed market in western China. However, so far, both sides haven't nailed down any details regarding the joint venture plan."

Mr Yu said "The joint venture will be located in the district of Changshou in Chongqing, where the entire facilities of Chongqing Steel Group will be relocated. As relocation work is still at a very early stage, the steel pipe facility is unlikely to come online in the near future."

Chongqing Steel Group's ongoing relocation work aims to boost annual output capacity from 3 million tonnes to 8 million tonnes including 3.5 million tonnes of medium plate. Completion is scheduled for 2010.