The LNM Group, the world's second largest steel company, said Thursday it has targeted a procurement volume in China of some US$300 million by 2006.

Such a plan is part of the efforts the company has beefed up in order to increase its presence largely in China, according to Malay Mukherjee, president and COO (chief operating officer) of Ispat International Ltd, a major wing of LNM.

"We firmly believe China is one of the leading places where we must expand our presence," said Mukherjee.

"We need support from Chinese suppliers, and we have to ascertain how much they can do in our annual US$8 billion purchase volume worldwide," he said.

For the first six months this year, LNM's purchase volume in China has already reached US$40 million, compared with merely US$5 million last year, said Mukherjee, while attending the LNM China Supplier Conference, held in the city yesterday.

The company unveiled at the event a large package of targeted purchase items for Chinese suppliers, ranging from refractory material, ferroalloy to coke and steel roll.

The China-based procurement of coke, for example, is expected to reach some 500,000 to 700,000 tons this year, according to Mukherjee.

The company's massive local purchase plan is regarded by analysts as essential to guarantee the smooth running of LNM's global operations against the backdrop of present robust steel demand on the markets worldwide, driving the continuous rise of raw materials for steel production.

As a multinational steel conglomerate with a total annual output volume of about 42 million tons, LNM has operations in 13 countries worldwide.

Yet the striking purchase plan in China is by no means the only area LNM has set its eyes on.

Apart from its regular exports to China, LNM is set to strengthen its local manufacturing presence, especially on the side of value-added products, according to Mukherjee.

While retaining its yearly export volume of steel products to China at about 2 million tons - the same as the last year -- the company will see in 2005 the beginning of production at its wholly-owned US$100 million plant in Yingkou of Northeast China's Liaoning Province.

With a total annual capacity of 400,000 tons, the plant will be producing cold-rolled and coated steel products, which are badly needed on the domestic market as indicated by strong demand from the local auto manufacturers.

(China Daily July 2, 2004)