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SIR Y K PAO'S VISIT TO BRITAIN, JUNE 1986
(f) NINGBO STEEL PROJECT
Background
1. Sir Y K Pao outlined this project to build a major steelworks at Ningbo (his native town; near Shanghai), to the Prime Minister in 1984. At current estimates, its total value would be around £4 billion, with a maximum UK content of £2 billion. Davy McKee have formed a consortium to pursue the project and are undertaking a feasibility study with DTI support. The first part of this was presented to the Chinese Ministry of Metallurgy in March. Davy McKee hope that Chinese will shortly authorise the consortium to proceed with the main study.
2.
The Chinese have made clear that financing terms will be crucial. The project is so big that at most a small part of it (eg blast furnaces) might be considered for funding under the recently established £300m UK soft loan facility. The consortium is considering introducing European partners to share the financing burden.
3.
On 4 February, Sir Y K Pao told our Senior Trade Commissioner in Hong Kong that he hoped to see agreement on this project in time for The Queen's visit to China in October; but the scale and complexity are such that this is unlikely.
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