《中国日报》英文版：Train wheels keep steelmakers on track
Magang group expects purchase of France's valdunes will help it develop advanced technology
The wheels of industry could be turning, literally, for the iron and steel industry as it combats overcapacity, according to a leading industrialist.
Ma'anshan Iron & Steel Group, more widely known as Magang Group or Ma Steel, sees the manufacture of train wheels as the way forward in driving sales both at home and overseas.
Heavy investment has led to overcapacity in various industries, none more so than the iron and steel sector.
According to data released by the World Steel Association, China accounted for 48.5 percent of the world's total iron and steel production in 2013, while latent production capacity is even bigger.
With production capacity included, China accounts for 60 to 70 percent of the world's iron and steel sector, according to Gao Haijian, president of Magang Group, China's ninth-largest steel maker and a recent recruit into the World Steel Association as a regular member on Oct 8.
China announced last year it would ban new projects in selected industries, including steel and cement, until 2017 and gradually eliminate operations that are not able to meet new technical standards. But steel production continues to grow, albeit at a slower pace.
"To find new sources of sustainable growth, China's steel manufacturers should consolidate their strengths, to distinguish themselves from each other," Gao says, adding that one of the group's strengths lies in manufacturing train wheels.
Established in the 1950s and located in Ma'anshan city in Anhui province, Magang was the birthplace of the first train wheel production line in China in 1964 and enjoys about a 50 percent share of the domestic train wheel market.
The group, with total assets of 88.6 billion yuan ($14.43 billion; 11.4 billion euros), produced 18.8 million metric tons of iron and steel in 2013, ranking 17th in the world, according to the World Steel Association.
广告Production is carried out by Ma'anshan Iron & Steel Co Ltd, a publicly traded company controlled by the Magang group. Shares of the subsidiary are listed in both the Chinese mainland and Hong Kong.
Though wheel manufacturing consumes just 2 to 3 percent of Magang's iron and steel production, it has been one of the most profitable components of the group for decades.
With the rapid development of China's high-speed rail, both at home and abroad, Magang is aiming to seize a significant market share in the emerging and rapidly developing market.
Their goal coincides with that of the government, with a focus on innovation in the rail sector.
Magang group signed an agreement in 2012 with the China Academy of Railway Sciences, the top railway research and development body, to import and localize manufacturing for heavy-load locomotive wheels and wheels for high-speed trains traveling faster than 250 km/h.
Magang acquired Valdunes, the France-based high-speed train wheel manufacturer, four months ago.
Specializing in the design and manufacture of wheels, axles and wheel sets, Valdunes is the sole supplier of these sets for TGV high speed trains, holders of the world rail trial speed record of 574.8 km/h.
Valdunes entered a bankruptcy restructuring process on March 31, and was acquired by Magang group two months later for 13 million euros.
The deal, which includes Valdunes's two plants in Dunkerque and Valenciennes, secured the jobs of 487 employees.
"The deal is strategically important for Magang as it will facilitate the development of high-speed train wheel technology for the company, expand its international sales channels and improve its brand recognition," according to Wang Xiaoyang, head of the group's capital operations department.
"With the most advanced technology and broadened sales channels, Magang will be a strong bridgehead in the global development of China's high-speed trains," says Gao, adding that a truly innovation-oriented society should also be tolerant of potential failures in order to better encourage innovation.
Magang aims to bring Valdunes back to daily operation as soon as possible and raise its annual sales to 2 billion yuan in the near future, from about 1 billion yuan.
"Magang plans to build the high-speed train wheels into a new engine of growth in the near future," says Gao.
To upgrade its rail wheel business, Magang has been cooperating with the China Academy of Railway Sciences.
The group invested 2.2 billion yuan some years ago in building an electric arc furnace, instead of the traditional blast furnace, to better support the R&D of high-speed train wheels and axles. The new facility began operation in 2011, the first of its kind in China.
"Compared with the blast furnace, the electric arc furnace has 30 percent lower production costs than the traditional method, and a significantly lower level of pollution," says Gao.
More importantly, the steel produced by the electric arc furnace is stronger than that produced by a blast furnace.
"If not fully prepared for pending change, many steelmakers may not be able to survive the new circumstances," warns Gao.
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(China Daily European Weekly 10/17/2014 page22)