(Yicai Global) Oct. 18 -- Chinese state-owned steel firm Shougang Group will build a new production base with its unit to cater to the demand for electrical steel parts in the world's largest new energy cars market.

Shougang Group will set up a joint venture with its subsidiary Shougang Co. to construct the manufacturing base for cold-rolled steel strips located in the city of Qian'an in northeastern Hebei province, the Beijing-based firms said in a joint statement yesterday. The JV will have a registered capital of CNY950 million (USD139.1 million).

The new factory will promote the company's overall competitiveness and capabilities to supply the NEV market with electrical steel, the statement added. The firms did not disclose the predicted time of completion nor the production capacity. 

The JV will form a local unit in Hebei to implement the project. This subsidiary is expected to have a net profit of no less than CNY220 million in 2021 and that of no less than CNY420 million in 2022.

Shougang Co. will invest CNY450 million to hold 47.5 percent of the JV's equity. The parent will have a 10.5 percent stake by paying CNY100 million. Another unit will invest CNY300 million to keep 31.6 percent of the equity. A fund set up by the government of Qian'an will offer CNY100 million to hold a 10.5 percent stake.

Editor: Emmi Laine