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Harsco Formalizes Joint Venture Agreement in China with TISCO
12/10/2010 - Harsco Corp. and Taiyuan Iron & Steel (Group) Co, Ltd. (TISCO) have established a new 25-year joint venture relationship that will address the environmentally beneficial processing and metal recovery of TISCO's stainless and carbon steel slag production byproducts across a range of potential commercial applications.
Harsco Corp. and China's Taiyuan Iron & Steel (Group) Co, Ltd. (TISCO) have established a new 25-year joint venture relationship that will address the environmentally beneficial processing and metal recovery of TISCO's stainless and carbon steel slag production byproducts across a range of potential commercial applications.
The partnership, recognized recently by both parties at ceremonies held in China, is the largest joint venture in either company's history. Harsco anticipates that the joint venture has the potential to generate new revenues of an estimated $30 million per year initially, ramping up to a projected run rate of approximately $50 million to $60 million per year when fully operational.
Harsco and TISCO will respectively share a 60:40 relationship in the partnership and have agreed to jointly commit capital estimated to be around a 1-to-1 ratio to the projected revenues. Harsco will fully consolidate the results of the joint venture in its financial statements.
The parties still must reach final accord on the definitive agreements with respect to operations, technology licensing, and land leasing, as well as obtain final Chinese government approval. Harsco expects these items to be completed in the first half of 2011 and the joint venture to commence operations in early 2012.
The partnership follows two years of detailed analysis undertaken by both parties following an initial Letter of Intent announcement in November 2008. Once the definitive agreements are concluded and the joint venture is fully operational, the new joint venture company, to be known as TISCO Harsco Environmental Protection Enterprise Co. Ltd., is expected to process as much as 1 million tonnes of stainless steel slag and up to 500,000 tonnes of carbon steel slag per year.
The joint venture company plans to market these materials for "zero waste" commercial re-use in such applications as metallurgical additives, recyclable stainless steel scrap, agricultural and turf fertilizer, and a range of roadmaking and construction materials.
With annual stainless production in excess of 2 million tonnes, TISCO moved up to become the world's largest producer of stainless flat products in 2009, the first Chinese company in history to hold the top ranking.
Harsco Corp. is one of the world's leading diversified industrial services and engineered products companies, serving key industries that play a fundamental role in worldwide economic growth. Harsco's common stock is a component of the S&P MidCap 400 Index and the Russell 1000 Index.
