Angang Steel (Ansteel; 0347.HK, 000898.SZ), China’s second-largest steel producer, announced that it would abandon plans for a major steel mill in Australia due to the high costs involved, the Australian reported. The firm signed an agreement in 2009 with the local Australian government to conduct a joint feasibility study into the proposed steel mill. However, government sources say Ansteel never seriously pursued the project, calculating it would be cheaper to ship raw iron ore from Australia back to steel mills in China for processing. Ansteel was reportedly put off by the high cost of construction, labor, and gas required for the project. The disclosure comes at a particularly sensitive time for Australia, given that its manufacturing industry already experiencing difficulty competing abroad thanks in part to the surging exchange rate of the Australian dollar.
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