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Sponsor China Metallurgical Construction Group Corporation

Editor in Chief Qi Dongping

Managing Editor Yu Wenbo

Editor Wang Yu

Art Director George Luo, Liu Bing

Translator Beijing Walkmutual Translators

Editors’ office No. 11, Gaoliangqiao Xiejie, Haidian, Beijing, PRC

Postcode 100081

E-mail mccnewsletter@mcc.com.cn

Website http://www.mcc.com.cn

Telephone 86-10-82169999

Facsimile 86-10-82169988

Disclaimer

Vol 3 No 1, March 2006

MCC Group Subsidiaries 6

Interview 7 - 8

Headline News 9 - 11

MCC Expected in Cuba

Interest in Developing Copper In Afghanistan

President Meets with Brazilian Guest on CSA Project

MCC Promotion in Sri Lanka

Mineral Projects in Pakistan Focused

A New ENFI Born

MCC Assured by Sinosure

A Highlight on Togo

President Visits Thyssenkrupp

PNG Market Open for MCC

MEMO Inked with Eritrea

Official Support Reassured on Brazilian Project

Four Core Businesses 12 - 16

Targets for MCC’s Structural Adjustment for the Next 5 Years

Baoye to Build Mauritania’s Airport on EPC

A Season of Harvest for 17MCC

Pioneering in Coal Mining

ENFI Recognized for Quality Records

Special Machinery Plant Built in Shanghai

A Key Player in the Northeast

Property Business Highlighted by SASAC

Tech Updates 17 - 18

Baoye Takes the Lead in NDT Business

Over 20 Innovations at 22MCC

(Voice)

Energy & Environment 19

BERIS Advocating Green Industry in Baotou

Treasures in Garbage

Linking Steel and Chemical

Industrial Development 20 - 21

Baoye Sets New National Records

ENFI Praised on Nottingham Uni’s Ningbo Campus

A Top Award for 17MCC in Shanghai

Baoye to Build Shanghai’s SSRF Facility

Sichuan’s Largest Gas Cylinder Progressed

China’s Widest River Tunnel Opens to Traffic

22MCC Established in Singapore

ENFI Sails Through Hi-Tech Enterprise Certification

Corporate Culture 22

Chairman Hailed as One of China’s Top Ten Managers 2005

Yang, the Most Reported Man for Year 2005

(New Numbers)

CONTENTSCONTENTSCONTENTSCONTENTSCONTENTSCONTENTS

This newsletter is for promotional purposes only.

The editors reserve all the rights. Please contact

in advance in case of reprint.

MCC TIMES in Chinese inscribed by: Yang Changheng

Back Cover: Engraving Works by MCC Artists

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MCC Group SubsidiariesMCC Group Central Research Institute of Building & Construction

Beijing Research Institute of Metallurgical Equipment

Shenyang General Institute of Geotechnical Investigation

China Nonferrous Engineering & Research Institute

Beijing Central Engineering and Research Incorporation of I&S Industry

Chongqing I&S Design and Research Institute

Wuhan I&S Design & Research Institute

Baotou Engineering & Research Corporation of I&S Industry

Maanshan I&S Design and Research Institute

Anshan Coke & Refractory Design & Research Institute

Anshan Metallurgical Design and Research Institute

Changsha Metallurgical Design & Research Institute

MCC Shenkan Engineering Technology Co.,Ltd.

MCC Group Wuhan Surveying Geo-Technical Research Institute

Wuhan Research Institute of Metallurgical Construction

China ENFI Engineering Corp.

Capital Engineering and Research Inc.

CISDI Engineering Co.,Ltd.

WISDRI Engineering & Research Incorporation Ltd.

BERIS Engineering & Research Corp.

MCC Huatian Engineering Technology Co.,Ltd.

MCC Anshan Coke & Refractory Engineering Co.,Ltd.

MCC Northern Engineering & Technology Corporation

ZhongYe Changtian Int’l Engineering Co.,Ltd.

CCTEC Engineering Co.,Ltd.

MCC Professional Training School

Shanghai MCC Hospital

The 1st China Metallurgical Construction Corporation

The 3rd China Metallurgical Construction Corporation

The 5th China Metallurgical Construction Corporation

The 13th China Metallurgical Construction Corporation

The 17th China Metallurgical Construction Corporation

The 18th China Metallurgical Construction Corporation

The 19th China Metallurgical Construction Corporation

The 20th China Metallurgical Construction Corporation

The 22nd China Metallurgical Construction Corporation

North China Metallurgical Construction Corporation

Shanghai Baosteel Metallurgical Construction Corporation

Shanghai Baoye Construction Co.,Ltd.

China Jingye Engineering Construction Contraction Corp.

MCC Hi-Tech Engineering Co., Ltd.

MCC Communication Engineering Technology Co., Ltd.

MCC Resources Development Limited

MCC-SFRE Heavy lndustry & Equipment Co., Ltd.

MCC Ramu NiCo Ltd.

MCC Duddar Minerals Development Co., Ltd.

Ramu NiCo Management (MCC) Ltd.

NCMCC Resources Development Co., Ltd.

MCC Real Estate Development Co.,Ltd.

MCC Meili Paper Industry Group

MCC Khor Paper Co., Ltd.

Shanghai MCC Int’l Economic & Trading Co.,Ltd.

China Global Engineering Consulting Co., Ltd.

Yang Changheng, an entrepreneur with his eye

on the world, believes that competition betweencompanies is more a matter of strategy thantactics.

The former vice-chairman and executive deputy

director general of Baosteel Group, who now headsthe country’s leading State-owned constructionenterprise, China Metallurgical Construction Group

Corp (MCC), has an ambitious goal.

“We will be among the world’s top 500 companies by

2010,” Yang says.

He began as chairman of MCC in late 1998, whenit posted a yearly loss of 120 mill ion yuan(US$14.8 million). Revenue has climbed ever since,

hitting 68.8 billion yuan (US$8.5 billion) last year;Yang expects it to double by 2010. Year-on-yearprofit is almost 100 per cent at 1.45 billion yuan

(US$172.6 million). In 2005, the company’sproductivity per capita rose to 700,000 yuan(US$85,000) from 530,000 yuan (US$65,000) in 2004.

Strong growth, he says, is strategically achievedthrough expansion and innovation.

“We’ve reduced operational risks by diversifyingour portfolio,” Yang adds.

The company has four core segments: EPCcontracting (engineering procurement and

construction), resources development, equipmentdes ign and fabr i ca t ion and rea l es ta tedevelopment. EPC contracting is Beijing-based

MCC’s traditional business and has helped itenter overseas markets. It plans to reduce EPCfrom 78 per cent of its portfolio last year to 68 per

cent in 2006. Resource development will grow to 2.4per cent, mechanical equipment fabrication to 20 percent, and property development to 5.9 per cent.

“Our company name no longer fits our business

portfolio, because we are expanding beyondmetallurgical construction,” Yang says, adding thathe is considering changing it.

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MCC clinched a number of projects over the past year

that will ensure sustainable development across severalsegments. More than 80 billion yuan (US$9.9 billion) innew orders were signed in 2005, an increase of 28 per

cent from the previous year. It signed a contract in Junelast year to build an airport for at least US$280 million inthe Islamic Republic of Mauritania in northwest Africa.

MCC is responsible for the entire project, includingdesign, equipment supply and construction, making itthe company’s largest contract in Africa so far.

In the resource development sector, MCC has claimed

rights to develop 3.1 billion tons of nonferrous metalreserves around the world. It is also actively workingwith non-metal materials such as paper pulp.

Yang says the company is talking with Russian interests to

build a 300,000-ton annual capacity pulp plant, follow-ing a similar US$90 million investment in a facility cur-rently operating in Myanmar.

“We are doing investigative work at the Russian site,

and the local government there is very happy with ournew processing project,” Yang says.

MCC plans to supplement foreign pulp production bybuilding paper making facilities across China.

“We will establish an industrial chain in the paper makingsector ,” he says.

Yang says MCC will focus on the development of

machinery equipment fabrication technologies to de-sign new products, and will continue looking at domesticM&A (merger and acquisition) opportunities.

He is in talks for buyout proposals with two local

machinery equipment manufacturers in NortheastChina and Northwest China’s Shaanxi Province.

“The takeovers are expected to be completed within theyear,” he says.

MCC has the capacity to complete at least 1 million

tons of steel structural and installation work per year.

It has also mapped out a plan to enter the global anddomestic real estate industry. The company has alreadyset up six regional subsidiaries to develop markets in

Beijing, Shanghai, Nanjing, Wuhan, Changsha andSouthwest China. Another is under consideration inNortheast China, Yang adds.

In 2005, MCC invested over 3 billion yuan (US$370

million) in real estate development across the country.

“Branding is crucially important to the development ofthe real estate business,” Yang says, mentioning thatMCC is also in contact with local partners in Pakistan

and Russia to build new real estate projects.

Bright future

The following years will be particularly strategicallyimportant.

“Innovation is the fundamental driving force behindMCC’s business growth. The key lies in innovation -

innovation in technology, in management, in thinking ineverything,” Yang says.

The company has introduced a number of measures toencourage innovation in a range of areas. Technological

research and development (R&D) investment accountedfor 1.5 to 5 per cent of annual revenue last year. Thecompany injected 1 billion yuan (US$123 million)

in technological R&D last year, compared with 700 millionyuan (US$86 million) in 2004.

It will establish several development centres to designnew products, and a couple of middle experiment basesto prepare the new products for a specific markets, Yang

says.

One of the bases will be located in Southwest China’sGuizhou Province, Yang says.

“The middle-experiment labs are very importantbecause they will link our products with the market and

ensure the success of our bulk investment in theresearch phase,” Yang adds.

MCC has also established two professional trainingschools in Xi’an, in Northwest China’s Shaanxi Province,

and Wuhan in Central China’s Hubei Province.

“Both centres are developing talented new people forour company,” he says.

Reforms to enhance management efficiency, transparencyand international competence are also under way.

delegation from Cuba, which has a traditional friendship with the Chinese people, visitedMCC for the first time on March 16, 2006. Chairman Yang Changheng met with the group led

On January 7, 2006, President Shen Heting met with the

new Afghan ambassador to China Mr. Eklil A. Hakimi.The two discussed in detail the exploitation of the Aynakcopper mine south of Kabul. President Shen reiterated

MCC’s wish to participate in the Aynak project underthe framework of developing t rade relationshipsbetween the two countries.

On February 21, President Shen Heting attended the2006 Beijing Pakistan-China Business Forum at theinvitation of the China Enterprises Confederation.

During the meeting Pakistani President Musharrafintroduced the investment environment to businessrepresentatives, and warmly welcomed Chinese invest-

ment in Pakistan. MCC is operating Saindak Copper-Gold project on lease basis and is developing the lead-zinc minerals in Duddar of the country.

Headline News MCC TIMES

President Shen Heting paid a working visit to Sri Lankafrom March 11 to 15, 2006. The two parties exchangedopinions on the airport expressway, sewers for the

science zone and a low-cost housing project. The presidenthopes to open a new chapter in the friendly relationshipbetween China and Sri Lanka.

AAAAAby Ricardo Cabrisas Ruiz, Minister of Social Affairs and Government. The chairman introduced MCC,its core businesses and its recent achievements, and expressed the hope of MCC to further deepen

the relationship between the two countries.

InterviewMCC TIMES

8 9

President Shen Heting attended the China-BrazilTrade Development Forum at Shanghai’s Grand Hyatton March 22. During the event, Brazilian Vice-President

Jose Alencar met with representatives of the China-BrazilBusiness Committee. President Shen attended themeeting, and spoke to the Vice-President about MCC

and Minmetal’s bid for German Thyssenkrupp’s CSAproject.

1110

MCC TIMESHeadline News

MCC President Shen Heting met with Brazil’sambassador to China, Luiz Augusto de Castro Neves atthe New Century Hotel in Beijing on March 30.

President Shen updated the ambassador onprogress on the Acominas Iron and Steel and CSA steelproject, and hoped for support with visa applications

for MCC staff visiting Brazil.

A comprehensive cooperation agreement was signedbetween MCC and China Export & Credit InsuranceCorporation (Sinosure) at the New Century Hotel in

Beijing on March 23, 2006. The signing marks theestablishment of a strategic partnership between MCCand Sinosure and an important step in risk manage-

ment for MCC’s overseas business and acceleration ofthe group’s market operation. It will greatly promoteMCC’s implementation of the national policy of seeking

business abroad.

President Shen Heting met with a delegation leadby the Eritrean National Development MinisterWoldai Futur on March 4, 2006. Mr. Futur invited

MCC to participate in the bidding for developmentof gold, copper and zinc resources and waste waterprojects. After cordial meetings the two parties

agreed upon and signed a memorandum ofunderstanding.

hina’s influential nonferrous engineering & research institute became China ENFI Engineering Corp. on January 8. This

indicates ENFI has reinvented itself to meet market needs, only five months after joining MCC. ENFI has been a part of

MCC President Shen Heting met with president of Togo

Faure Gnassingbe on February 14, 2006. The twoexchanged opinions on MCC participation in Togo’snational construction. President Faure raised the issue

of Togo’s rich phosphorus deposits, and hoped thatMCC would participate in the building of Togo’s express-ways and ports. President Shen expressed MCC’s

interest in Togo’s markets.

On March 7, 2006, President Shen Heting leadan MCC delegation to visit ThyssenKrupp Ironand Steel in Germany, and on the 10th signed a

memorandum of understanding on the Brazil CSAproject. Chairman of the CSA Project Lindenbergwelcomed the delegation and expressed gratitude

for MCC’s work on the bid.

Chairman Yang Changheng met with a delegationled by Vice-President and Oil and Energy Minister ofPapua New Guinea Sr. Moi Avei. The two parties

exchanged views on the Ramu NiCo project andfurther expanding investment in Papua New Guinea.Vice-President Avei expressed his high regard and

gratitude for MCC, and hoped that the Ramu Projectwill provide an opportunity for further cooperation ininfrastructure, fisheries, textiles, agriculture andtourism.

MCC’s strategy in the lease of Saindak Copper-Gold Complex and development of Duddar Lead-Zinc Project, both in Pakistan andRamu NiCo Project in Papua New Guinea. Successful transformation of ENFI will strengthen MCC in the resource exploitationsector.

CCCCC

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MCC TIMESEPC Business

TTTTTararararargggggetsetsetsetsets for MCC’s

structural adjustments over the

nenenenenext fixt fixt fixt fixt fivvvvveeeee years

In the next five years MCC will focus on the four core businesses of high added-value contracting projects, manu-facturing of technical equipment, resource exploitation and property development. Income from each core businesswill account for at least 10% of the group’s total revenue.

Diversify general contracting, increase revenue, technical content and added value of non-steel operations. Adoptcapital operations; use EPC, EP and BOT methods to maintain quick and sustainable growth of contractingoperations. By 2010 achieve income of RMB 68 bln, with RMB 1.35 bln from overseas income and 50%from non-steel operations.

Manufacturing of technical equipment will be actively developed via the commercialization of proprietary andkey technologies and the manufacture of key components and assembly. By 2010 achieve income of RMB 26bln, 20% of the group’s total income, with RMB 3 bln from overseas income.

Combine the new national resource policy and the group’s growth, with our own strengths as foundation andrelated technologies as link. Position our business around metal ores and resources which China lacks, andoperate according to local conditions in different places in order to develop iron ore, non-ferrous metal resources,paper-making and coal-based power. The proportion of income from resources in overall revenue will risesteadily, reaching RMB 20 bln in 2010, 15% of the group’s total income, with RMB 17.5 bln being from theoverseas operations.

Improve handling of large funds and capital, stably promote large-scale property development. By 2010 achieveincome of RMB 13 bln, 10% of the group’s to ta l and with RMB 3 bln from overseas income, becoming oneof China’s ten biggest real estate companies.

BaoyeBaoyeBaoyeBaoyeBaoye toBuild

Mauritania’sAirport on

EPCEPCEPCEPCEPC

MCC Baoye is the lead contractor for the

Nouakchott Int’l Airport Project ofMauritania and preparatory work for theproject has started recently. The total

value of the project is USD 280 mln, withBERIS and the Air Force Design Instituteundertaking preliminary design, and

Shenyang Institute of GeotechnicalInvestigation carrying out geologicalsurveys. The project will take three years

to complete, with the preliminary designstage needing one year.

The project suits the overseasexpansion plans of the

group and its subsidiaries,and if successful will be ofgreat importance in open-

ing African and other over-seas markets. MCC Baoyehas formed a steer ing

group headed by GeneralManager Zhang Chuangyiin order to oversee plan-

ning and coordination and organize a

The new airport is jointly

funded by China (80%) andMauritania (20%). The hostcountry will repay the cost

of construction with goodssuch as oil and minerals.

Related Info

EPC stands for engineering, procurement and

construction. This project will include finance,debt repayment, trade, geological surveys,design, equipment, construction and operation,

along with language, negotiation, business,contracts, law, taxes and exchange rates.

A season of

harharharharharvvvvvestestestestestfor 17MCC

MCC has been makinggreat efforts to win more

On January 28, 2006, 17MCC signed a

deal with the US’s TGS and Columbia’sConstruema on a Columbian watertreatment project and a Venezuelan

residential project.

On February 17, the company inked a

contract with Kuwait’s SITCO/URRC on the construction ofthe Olympia Building in Kuwait’s capital, Kuwait City. Thebuilding will have thirty-five floors above ground, along with

two basement levels, and will be formed of two towers andapron buildings, giving a total area of 115,000 m2. Thebuilding will use a steel structure framework. After comple-

tion the building will house the Olympic Council of Asiaand a luxury hotel, with a shopping center in the apronbuildings. 17MCC is using the internationally common

EPC method for this project and will therefore provide anend-to-end service, undertaking the engineering, procure-ment and construction.

And after that success, 17MCC went on to win thetender for the construction work for two 55MW oil-

burning power plants for Garri in Sudan. The plantsare to be located in Algli, 70km north-east of theSudanese capital Khartoum, 13km east of the Nile

River. 17MCC’s construction department is currentlybusy forming a project management team andconstruction team, and preparatory work is proceeding

apace, with a trip to Sudan expected in the very nearfuture.

management team that will meet man-

age this EPC project on behalf of MCC.Preliminary design for the project hasalready started, and in January an ad-

vance team visited Mauritania for siteinspection. In order to ensure theproject is successful, Baoye’s contract-

ing department will undertake engi-neering design as soon as possible;participate in equipment manufacturing

and put commercial and financial mea-sures in place in advance. Also, staff with

knowledge of civil aviation

design and equipment, airportplanning, law and translationwill be employed from the

p r i va te and academ icsectors.

1717171717overseas business, with a number ofcontracts signed recently.

MCC TIMES Overview

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MCC TIMESEquipment FabricationMCC TIMES Resources Development

ENFIENFIENFIENFIENFI Recognized for Quality RRRRRecorecorecorecorecordsdsdsdsdsOn February 21, 2006, well-known industry website,minesite.com, published a report on Griffin Mining’s

successf u l operations in China, titled Griffin MiningHas A Gold Card Up Its Sleeve. The report said “Anyonewho looks at Griffin’s history will be amazed by the speed

and ease with which their projects in China go intoproduction,” and went on to point out that “the key toGriffin’s success in China is its choice of MCC’s ENFI

as consultant and construction management.”

Caijiaying Zinc Mine is the first metal mine in China to beprospected and constructed with foreign investment ,

and is also the first in China to use entirely tracklessshafts. The mine is designed to extract 20,000 tons ofore per day. It is the first EPCM (combining engineering,

procurement, construction management, supervision

From starting operation in June 2005 to the end of theyear, 92,026 tons of ore were processed into 6,676 tonsof concentrate, providing good profits and setting a new

record in mine construction in the country.

PioneeringPioneeringPioneeringPioneeringPioneeringin Coal Mining

he Survey for Storage of

Tailings from Tangshan

Tangshan Steel’s Sijiaying Iron Mine

processes seven million tons of oreannually. Tailings were originallystored on open sandy ground to the

west of the mine. To minimize landuse and make full use of currentlyavailable wasteland, MCC Shenkan

chose to locate tailings storage at acoal mine at Fange, 25km away. Thetailings will be stored within an

embankment around the pits left bythe coal mine, with the first stage ofwork covering about 1.8 km2, provid-

ing storage of 18.11 million M3, andusing waste minerals alreadypresent in Tangshan. Fange is situated

Faced with this situation, MCC

Shenkan used advanced interna-tional techniques and FLAC3Dcomputation to gather data for

engineering plans. Experts decidedthat the report is accurate and theengineering proposal is feasible.

The six-volume report took sixmonths to complete, and includestests of the materials to be used in

building the embankments andanalysis of the stability of thefoundat ions. The survey was

problematic, with the area havingvery complex conditions. To datethere has been no similar projectundertaken either in China or

abroad.

The ‘non-standard’ sector includesspecial vehicles and machinery.

Shanghai Baoye Machinery Co. hasa proud record in this field, earnedthrough many years of hard work and

innovation. They have developedtheir own range of special vehiclesand equipment, creating the largest

non-standard machinery plant in thenorth of Shanghai.

When non-standard machinery is

needed for the steel, chemical orshipbui lding industr ies, or fordepots, ports and harbors, it is rare

for domestic companies to beconsidered, and the needed equip-ment is imported at great cost.

Shanghai Baoye conducted targetedmarket research and focused on thedevelopment of the needed vehicles

and equipment and started to workwith well-known foreign brands.The company has developed 300

different remote-controlled trackedloaders, large slag tankers, wastesteel transporters, skip carriers, bi-directional and environmentally-

eff icient trucks, dust-reducingvehicles, and self-loading trucks,with total value of RMB 200 mln.

and trial commissioning) project that ENFI has ever

undertaken. Funding for the project was finalized inSeptember 2003, with preliminary design work startingin February 2004, construction planning starting in

April and actual work commencing in June. Workcontinued through the winter months with concentrateproducts appear ing as scheduled in June 2005

and the ant ic ipated capacity reached in Septemberof the year.

SpecialSpecialSpecialSpecialSpecialMachineryPlant Built

in Shanghai

Baoye has also achieved great resultsin developing special equipment.They have developed a 40-ton electric

flatbed truck, tankers of up to 80 tonsand special units to handle nuclearreactor piles. They have made over

1,000 load-bearings for Singapore,main components for Hangzhou’scross-bay bridge, and 723-ton

Luishia silo in Congo. Recently, acontract for 1,400 tons of specialequipment was inked with Hitatchi

China.

Currently Baoye is working on aseries of 35, 45 and 50-ton articulated

tankers, loaders designed for steelindustry and a wide range of engi-neering machinery, significantly

reducing energy use and pollution.

On January 25, 2006, the openingceremony for the north-east’s largest

steel structure and commercial concreteplant was held, along with a ground-breaking for a 300,000 ton ERW steel

pipe project at 3MCC’s steel piping base.

In order to accommodate Anshan Steel’stechnical upgrade, 3MCC has over the

last eight months relocated their struc-tural and manufacturing strengths fromthe steel factory. They can now produce

100,000 tons of steel and concretecomponents annually, making them the

A KKKKKeeeeeyyyyy Player in the Northeast

Mayor of Anshan Gu Chunli said that thecompletion of the two projects heralded

ever greater success for 3MCC and pro-vided a new model for industrial relocationin Anshan. He also commented that it

Take the remote-controlled tracked

On behalf of MCC President Shen Heting

offered hearty congratulation to 3MCC,saying that the piping project has thestrong support both of MCC and local

government, and that 3MCC must takethe opportunity to provide an example ofhow SOEs operate and to promote and

strengthen MCC’s technical equipmentbusiness, contributing to Anshan’seconomy.

largest and best-equipped of this type in

north-eastern China. This has alreadybrought huge profit and social benefit.The RMB 420 mln worth ERW piping

project is 3MCC’s largest to date, and amajor part of its structural adjustment.The project will generate RMB 2 bln of

revenue and RMB 180 mln income tax.

was of great significance in revitalizingthe rustbelt industrial province and

promoting the city’s economy.

in an area prone to earth tremors,with many active faults, making thegeological conditions rather poor.

Under the storage area are theabandoned mines and layers ofcoal mineable in the future, which

will have an effect on the stability ofthe storage area.

TTTTTSteel’s Luan County Sijiaying IronMine at Fange Coal Mine, completed

by MCC Shenkan QinhuangdaoEngineering Technology Co.,Ltd.,recently passed expert examination,

thus marking an advance in surveyingand engineering work for storage oftailings at coal mines.

loader as an example: Baosteel has

over 10,000 tons of slag every year,which needs to be cleared from thefurnace by loader. To do this more

efficiently and effectively, a remotecontrol loader is essential. Baoye setup a special workaing group on this, and

after several months of testing theyproduced a large remote-controlledloader. Staff can operate it from

between one and two hundredmeters away, including starting andstopping the engine, adjusting the

speed, braking and steering andoperating the working apparatussimply by pressing buttons. Over thelast two years they have developed

a wheeled version, which is moremaneuverable, more efficient andhas a wider scope of application.

15

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PrPrPrPrProperoperoperoperopertytytytytyBusinessHighlightedby SASAC

On October 10, 2005, the State-owned Assets

Supervision and Administration Commission(SASAC) added eight companies to its list ofstate-owned enterprises (SOEs) engaged in

According to a specialist in the property-development sector,

SASAC hopes to integrate the property development business of

SOEs in order to maintain and raise value of state-owned assets,

enlarge and strengthen the SOEs, and ensure a supply of

affordable and quality housing for the public. Yi Xianrong, expert

from the Academy of Social Sciences, indicated that SOEs have

an important social role to play and should not simply pursue

maximum profits.

Maintaining and raisingvalue of state-ownedassets

Maintaining and raising value of

state-owned assets is SASAC’s

primary aim, and that requires large

and robust SOEs. SASAC Chairman

Li Rongrong has said that if an

SOE’s core business is not ranked

in the top three in its sector, it will be

integrated. By drawing up this list

Aiming to be biggerand stronger

Vice-chairman of China Real Estate

Association Meng Shaosu said at

the 2005 China Mergers and Acqui-

sitions Conference that reorganization

of the real estate business of SOEs

is an important process which will

require time. If completed successfully

it will also encourage reorganization

of resources in other SOE sectors.

The advantages of SOEs in the real

estate sector lie in their control offunds and land. SOEs have moresources of financing than other

property developers and rely less onbank loans. They also have accessto land transferred from the state.

These factors are the foundation oftheir leadership in the sector.

MCC – facing risktogether

MCC is one of the third batch of SOEs

to be named in this way by SASAC.

In an interview with Property Market,

President Shen Heting said “Al-

though property development is

indeed one of the group’s core

businesses, but that does not mean

it is our only business.” Property

development is only one of MCC’s

four core businesses, accounting for

only 10% of the total. There are no

plans for radical expansion, and

MCC develops mainly land it already

owns, rather than purchasing new

land.

The president also indicated that he

was well aware of both the advan-

tages and pitfalls of operating an

SOE. For this reason, the group is

taking a careful attitude to property

Public and PrivateCompanies co-exist

There is a need for reorganization

of SOE real estate assets in order

to clarify the core businesses of the

enterprises, improve efficiency of

asset utilization and standardize

development of the sector. However,

during reorganization the govern-

ment should provide guidance with

market measures being used to

make the changes. Only when state-

owned developers and private firms

co-exist and grow together, can a

balanced market be achieved.

on-destructive testing(NDT) is becoming an ever

Personnel are the key to Baoye’s long-term NDT projects,with four professorial-level employees, forty senior engineers,forty engineers and thirty-five technicians. A range of test-ing techniques are used, including ultrasound, radiation,magnetic powders, permeation and eddy currents. High-tech equipment is imported from the US, Germany, Japanand Korea, including ultrasound sensors and X-ray, Ir192and Se75ã machines. There are also various kinds of mag-netic field and powder sensors and eddy currentinstruments. All of this puts Baoye at the forefront of thedomestic sector.

Technical innovation is also a driving force. Alongsidecompleting NDT tasks, Baoye carries out largeamounts of research and development, mainlyincluding technologies such as testing and repair ofcontainers for molten steel, the use of Se75ã in test-ing special equipment and ultrasound testing equip-ment for welding of large steel structures. These haveall won special praise.

Third is the aim of customer satisfaction.Baoye has always put the client first, with risksand dangers being promptly reported and dealtwith before worsening. For example, when aslow leak was identified in a high pressurepipe at Baogang Chemical Co.’s K2201 reactiontower a hairline flaw was found, allowing thepipe to be replaced and the hidden dangerremoved.

Finally, Baoye aims to take advantage ofreorganization of specialties, equipment, andpersonnel to realize its potential – for exampleaddition of steel structure testing to the originalpressurized container and special equipmenttesting. The complete set of key technologiesfor steel structure testing include testing ofphysical properties of the steel and fasteners,metallurgical analysis, chemical analysis,NDT, welding evaluation, stress testing andmonitoring and factory testing and evaluation.This ensures the quality of manufacture andinstallation of steel structures, thus enhancingcompetitiveness.

Baoye’s NDT business is currentlyexpanding in leaps and bounds, froman original two million to today’s morethan ten million, becoming China’sleading NDT business.

Real Estate

and requiring other SOEs to di-

vulge themselves of these assets,

core businesses will be reduced

and SOEs will be leaders in their

fields.

development and the responsibilities

it brings. In February this year the

group purchased a property firm

owned by Nanjing Housing Administra-

tion for one hundred million yuan.

The deal went smoothly, taking only

fifteen days to complete. The reason

for the quick success is that the

purchase was carried out via the

marke t , w i th no government

intervention. At the same time, the

group will expand through market

forces, not through expansion of

assets. He also said that relying on

land transferred from government

wou ld b r i ng g rea te r r i s k o f

reorganization, to add to the market

risks already faced.

END

MCC TIMES

property development as part of their core business, making atotal of thirteen. Six of these, including MCC, count both construc-

tion and property development amongst their core businesses.

NNNNNmore popular technology in research anddevelopment, technical services and engineering.Shanghai Baoye has been constantly improving thismethod, making it a part of the company’s brandand putting it into commercial development.

Fourth is to expand in the market. Baoye’s first NDTlab was made up of the current central lab’s testingand welding research lab and Baosteel’s pressurizedcontainer lab. It was then expanding into the NDT ofpressurized pipes and special equipment. It has

been moving into other sectors, undertaking NDTof the steel structures for the tunnels on

Shanghai’s outer ring road, the ShanghaiMaglev, Shanghai’s central ring road, the

Shanghai-Pudong bridge, Pudong CarCity, the Yokohama Shipyard, the

Shanghai Port Square and exhibitioncenters and sports arenas.

END

Tech Updates MCC TIMES

BaoBaoBaoBaoBaoyyyyyeeeee takes the

leadleadleadleadlead innon-destructive

testing

16 17

1918

Energy & Environment MCC TIMES

OvOvOvOvOvererererer 20 Innovations at22MCC

In 2005, 22MCC focused on technical innovation and increased investment in new technology, producingover twenty new techniques. This is having a real effect in improving construction technology, work qualityand efficiency and reducing costs.

In building projects, 22MCC is using eight new technologies in building design and construction. Of these,

pumping technology for C60 concrete reduced significantly costs at several sites in Beijing and a newsupport system used on the F1 project at Beijing’s Financial Street cut related costs down by one half to twothirds.

In machinery installation, new electronic instruments have greatly increased the accuracy of measure-

ments in cold frame and machinery adjustment, removing the errors of traditional instruments. Pulsedpressure cleaning of hydraulic pipes has improved the quality of cleaning and reduced the time needed byfive to seven days.

Six new methods for simulating the installation of steel frameworks are also in use. Computer control of

drilling and milling machinery has also increased productivity.

In furnaces, 22MCC formulated the Furnace Chimney Construction and Examination national standard forthe China Construction Association and developed simulation technology for the construction of coking

furnaces. In municipal engineering, underground pipe cleaning technology that does not require excavation,high strength pipe and cable welding and computer controlled cable splicing technologies were mastered.In road and bridge engineering, new construction techniques for roads in desert areas were developed,

greatly reducing the difficulty of this type of work.

BERISBERISBERISBERISBERIS,,,,,Advocating Green

Industry in BaotouBaotouBaotouBaotouBaotou

The domestic waste disposal project designed by BERISfor Baotou has opened a new road for urban waste

disposal in China, meeting national requirements forsaving resources and a sustainable economy.

While continuing to expand its iron and steel business,MCC BERIS is also expanding in different areas. Here,

it adopted high-tech methods from Canada to producea management system which sorts waste and producesfertilizer from the organic components. The main features

of this are the production of liquid compound fertilizersand organic fertilizers, and the separation of plastic,metal, glass and paper waste. The project can handle

500 tons of waste per day, setting Baotou a target forwaste management which is harmless, reduced inquantity and produces resources and profit. The organic

fertilizers produced will improve Baotou’s desertification,salinization and vegetation, enhancing the city’senvironment and organic agriculture.

This project combines fertilizer production, recycling andlandfill, making it one of China’s most advanced waste

handling systems.

TTTTTrrrrreasureasureasureasureasureseseseses in the Garbage

Improving the management of waste can improve theenvironment we rely on and produce profit. For severalyears SBMCC have been carrying out successful trials

on how to improve the rate of waste reclamation andearn that potential profit in order to maximize the valueof waste materials.

SBMCC’s core businesses are equipment repair,combined production, automobile manufacture and

services. The main types of waste produced are steel,tires, iron shavings, oil and batteries. There is a widerange of waste, with no large quantities of any one kind,

making it hard to achieve economies of scale in sale oruse. To deal with this situation company managementworked with front-line workers to deal with problems

arising in reclamation of waste products and institutedpunishment and reward measures designed to reducecosts, increase efficiency and save resources. This

increased the reclamation rate of waste products andlaid a foundation for further increasing profit.

For example, the retail price of old tires rose 57.14%, in2005 alone earning 226,500 RMB. Taking advantage

of the rise in oil prices, the procurement departmentrepeatedly compared prices and earned 42% more per

MCC TIMES Tech Updates

LinkingLinkingLinkingLinkingLinking Steeland Chemical

strategic cooperation agreement was signedwith Inner Mongolia’s Qinghua Group at CISDI on

The three parties will work together to launch innovativeprojects to develop a sustainable economy, and this

represents the first time China’s iron, steel and chemicalindustries have worked together this way. By bringingtogether the greening of industry and pollution treatment

they will make a contribution to developing a new type ofindustrialization.

AAAAADecember 19, 2005 by CISDI President Xiao Xuewen,

Qinghua Chairman Huo Qinghua and head of China 2nd

Chemical Engineering Institute Zhang Qinggeng.

barrel. Meanwhile processing of waste steel createdearnings of 452,300 RMB for the company. In this waySBMCC is taking advantage of market opportunities and

making all possible use of waste to reduce costs.

1918

“MCC has clearly increased internal quality,economic conditions are good, the future is brightand its achievements are exciting.”

“MCC has moved from growth by expansion togrowth by innovation, and management is crucial.Through reform, the group headquarters will ceasemanaging production this year, and concentrate onlyon capital management. Also, our subsidiaries willhave a basic plan for reform, with suitable companiesbeing reorganized under group management.”

“We need to build a modern business and improveoperational model, link functions, transforming ourbusinesses into technical and managementcontractors, forming a good corporate governancestructure: 60% of staff will be managers andtechnicians, 40% will be highly-skilled operators.”

Voice “A socialized view of business places business in asocial environment, taking social effects and theharmonious development of both business andsociety into account alongside profit. In doingbusiness abroad, cultural differences and valuesshould be understood and acknowledged.” --------Qiao Longde, President of

State-owned Enterprises Supervision Committee of the

State Council, praising MCC at an MCC Conference afterChinese New Year.

--------Yang Changheng speaking to

MCC’s construction and R&D firms.

--------Vice-President Wang Yongguang

said in his Issues for Firms doing Business Abroad.

--------Yang Changheng, speaking ata meeting of MCC officials in Shanghai.

2120

BaoyeBaoyeBaoyeBaoyeBaoye Set New National Records

While sustaining growth, MCC Baoye has set a number of noted records.Recently five of these have been entered into the 2005 China ConstructionIndustry Record Book.

These are the synchronized installation technique for the steel structure for

the Zhengzhou International Conference Center; the Nanjing Olympic Stadium,which covers 13634m2 and has a steel framework weighing 12153 tons, thelargest of its type in China; the expansion joint-free technique used in the

construction of NEC’s 5th generation clean room for thin-film transistor LCDscreens, the crane installation of the machine bed for Baosteel’s 5000mmwide and thick rolling mill; and the online construction of Baosteel’s No.4

furnace.

22MCC EstablishedEstablishedEstablishedEstablishedEstablished in Singapore

The steel structure engineering branch of 22MCC is relying on its brand andinnovative technology to widen its fields of operation and make inroads into

foreign markets. After signing a deal to build Singapore’s PharmaceuticalPlaza, 22MCC has taken the opportunity to meet international standards andstrengthen links with Singaporean design and supervision firms and large

international construction companies. Through a good corporate image andquality construction techniques 22MCC has won recognition in Singapore’sbuilding trade and its local influence is increasing.

Lately, the branch company of 22MCC won the tender for construction of anIKEA home-improvement store. This is another success for 22MCC’s work inSingapore and adds to the expansion of overseas markets.

A Top AAAAAwwwwwarararararddddd for 17MCC in Shanghai

17MCC’s stainless steel making project for Baosteel was recently awardedthe Lu Ban Award for construction, the first time a steel project has won thishonor.

The Baosteel Group’s Shanghai No.1 Steel Works stainless steel project is

the largest and most difficult of its type, and also the largest single project17MCC has ever undertaken. The project includes manufacturing systemsfor stainless steel and carbon steel, and is the first to combine these with both

an electric furnace and a converter. 17MCC’s high quality engineering work,range of new technologies and materials and strict quality managementproduced excellent results.

Sichuan’s LargestLargestLargestLargestLargest Gas Cylinder Progressed

Since the new year began, work on the Panzhihua Steel Works 150,000m3

coking gas cylinder has progressed towards structural completion. CISDI isthe lead contractor for the project, with 19MCC undertaking construction.

The construction of the 150,000m3 cylindrical thin-oil sealed cylinder is part ofthe project moving the original 120,000m3 coking gas cylinder. The project

was started on December 15 last year and is due to be finished this July. Thetotal weight of the steel structure will be 2400 tons, with 700 already in place.

China’s Widest River Tunnel OpensOpensOpensOpensOpens to Traffic

The Shanghai Xiangyin Road Tunnel – China’s widest – was completed andopened to traffic on December 31 last year. At 11.4 meters wide, it is the widestof China’s tunnel boring machine produced tunnels. It lies between the Outer

Ring tunnel and the Yangpu bridge, with four lanes running through two chan-nels and a designed speed of 80kmh, twice that of other tunnels. The me-chanical installation branch of 22MCC undertook weak spot engineering and

ventilation and electrical supply for the tunnel management building. Theelectrical installation branch of 22MCC has already worked on major projectssuch as Shanghai’s Outer Ring and Yixian Road bridges, the Donghai Bridge

at Yangshan deep water port and Dalian Road.

ENFIENFIENFIENFIENFI Praised on Nottingham Uni’s Ningbo Campus

The ENFI-designed Ningbo Campus of the UK’s Nottingham University drewhigh praise from British Deputy Prime Minister Prescott, who when attendingthe ceremony for dedication of the campus and laying of the foundation of a

new sustainable development institute said “I feel like I’m in Nottingham, it’sexactly the same.” Nottingham Ningbo is China’s first independent jointventure university, and uses a garden campus to provide a landmark for

Ningbo.

BaoBaoBaoBaoBaoyyyyyeeeee To Build Shanghai’s SSRFSSRFSSRFSSRFSSRF Facility

MCC Baoye’s mastery of shock-absorption technology and successful manufacture of test machinery won it thetender to produce supports for the storage ring for the Shanghai Synchrotron Radiation Facility (SSRF), making it one

of China’s leading firms working on scientific installations. The facility was jointly proposed by the Chinese Academyof Science and Shanghai Government, and then approved by the State Council. Baoye will use its proprietary shock-absorbing steel structures and tremor-proof concrete to construct the supports and concrete mountings for the SSRF

storage ring.

ENFIENFIENFIENFIENFI Sails Through High-tech Enterprise Certification

ENFI won its High-Tech Enterprise Certificate from Zhongguancun Science and Technology Park on January 23,

2006, demonstrating that ENFI exhibits the characteristics of a high-tech enterprise. According to the regulations,ENFI will increase research and development spending and raise innovation ability to create competitive intellectualproperty and thus promote healthy growth of the company.

MCC TIMES Industrial Development

20 21

2322

Chairman Hailed as One

n February 18, 2006, the

ceremony to name China’s

MCC Chairman Yang Changheng has been named “Most Reported Entrepreneur of the Year 2005” by a panel ofjudges which selected the year’s most important stories and people in the news on behalf of China Enterprise

Confederation and China Enterprise Directors Confederation. In 2000 the selection of most reported entrepreneurswas added to the selection of the ten biggest business news stories to reward and honor the best of China’sentrepreneurs. Chairman Yang was described as leading almost one hundred thousand MCC people to further

China’s iron and steel industry.

Yang, A MostMostMostMostMost ReportedMan of Year 2005

Otop ten managers for year 2005 was

unveiled at the National People’sPolitical Consultative Congress Hall,with one hundred leaders from all

sectors up for selection. ChairmanYang was named as o n e o f“China’s Top Ten Managers 2005”,

and was commended by nationalleaders. The award was given for hisinnovative thinking in enterprise

management and notable successes,his contribution towards building a

resource-conserving society, which made him a leader in the field this year.

Corporate CultureMCC TIMES

of “China’s TTTTTopopopopop TenManagers 2005”

Engraving Works by

22

MCC ArtistsChina’s thinnestcold sheet rolling

line went intooperation recently.Hunan Hualinglian

Steel’s picklingline can producecold rolled coils

0.25mm thick and1000mm wide.

19MCC took lessthan 100 days tobuild a tufaceous

cement productionline for Guangxi’sLiuzhou Steel

Group, a newrecord in China’sconcrete plant

construction.

Baoye’s FirstFrameworkEngineering Plant

went into produc-tion recently, withan expected

annual productionof 70,000 tones ofsteel components.

In 2005, MCC Groupachieved profits ofRMB 1.4 bln, a

leader amongSOE’s with assetsof over RMB 50 bln.

The Group’s netassets grew 33%.

The MCC Group

business structureis improvingsteadily. In 2005

non-steel revenuegrew 0.4%,reaching RMB 24.2

bln.

0.250.250.250.250.25 100100100100100 24.224.224.224.224.2 billion 70,00070,00070,00070,00070,0001.41.41.41.41.4 billion

24