Background
RESTRICTED
1.
Sir Y K Pao, a
introduced this
native of Ningbo,
billion; maximum UK content £2
project (total cost £4
billion) to the Prime Minister in November 1984. The
estimated cost has risen substantially since the project was
first put forward.
2.
Davy McKee have formed a consortium to pursue the
project and a re undertaking a feasibility study with DTI
suport.
First 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.
Chinese have made clear that financing terms will be
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 Ioan facility. Davy Consortium a re considering
introducing European partners to share the financing burden.
On 4 February,
Commissioner
4.
this project in time for The Queen's
Uctober; but the scale and complexity
Sir Y K Pao told our Senior Trade
in Hong Kong that he hoped to see agreement
on
visit to China in
a re such that this is
unlikely.