Background
1.
Sir Y K Pao,
RESTRICTED
native
of Ningbo, introduced this
project (total cost £4 billion; maximum UK content £2 billion) to the Prime Minister in November 1984. The
estimated cost has risen substantially since the project was
first put forward.
2.
suport.
have Davy McKee
First
formed a consortium to
pursue
the
project and are undertaking a feasibility study with DTI stage of study was presented to Chinese Ministry of Metallurgy on 3 March. It is hoped that the Chinese will authorise consortium to proceed with main study.
within 2 months or SO.
3.
terms will
be
Chinese have made clear that financing
crucial. Project is so big that at most a small part of it (eg blast furnace) might be considered for funding under the UK soft loan facility. Davy Consortium a re considering introducing European partners to share the financing burden.
4.
Senior
Trade
on
On 4 February, Sir Y K Pao told our Commissioner in Hong Kong that he hoped to see agreement
this project in time for
in The Queen's
to China visit
Uctober; but the scale and complex i ty are such that this is
unlikely.