Baosteel in Shanghai is the third largest steel producer in the world and number 372 on the Fortune list of the 500 biggest companies in the world.

Says Ji Tongxiang, Deputy General Manager of Baosteel’s Raw Materials Purchasing Center: “Last year we produced close to 22 million tonnes of steel, this year we are at some 28 million tonnes, next year this will grow to about 30 million tonnes and by 2012 we are likely to reach 80 million tonnes. That will make us among the 200 largest companies in the world and the most competitive steel producer.”
The Baosteel factory in Shanghai occupies an area of 20 by 20 kilometres or approximately the size of Macau. We went to the port area which is almost a 30-minute drive from the company headquarters – and is still on company land. Some 150 bulk carriers call into the port a year to feed enough iron ore into the steel production, and this number will also grow. There is also a new deepwater port where considerable lightering is already done, and this will also be able to accommodate future VLOCs.
Baosteel specialises in producing high-tech and high-value-added steel products. The company has become a main supplier to many industries, such as automobile, shipbuilding and exploration/distribution of oil & gas companies, companies producing household appliances, electrical apparatus, pressure vessels and containers, and food and beverage packing, and metalware companies. Baosteel also produces stainless steel, special alloys and high performance building materials. In addition to the domestic market, products are also exported to more than 40 countries and regions, including Japan, South Korea, the USA and the European Union.
“Of the iron ore we use, about 55 to 60 per cent comes from Australia, with the remainder coming from Brazil. A bulk carrier will typically take eleven days from Australia to Shanghai. The biggest berth we have can accommodate a bulk carrier of up to 365,000 tonnes. Our harbour is the largest such facility in Asia and we have a total of 15 vessels serving Baosteel alone. The Capesize vessels trade only for us, meaning that we are in control of the logistics of supplying enough iron ore,” says Tongxiang, who is also the General Manager of the Logistics Department. “We work with the biggest bulk carrier operators, such as MOL, NYK and Cosco, and we always enter into long-term contracts.
“The main key to successful operations,” continues Tongxiang, “is our focus on large scale, high efficiency and low cost. When it comes to logistics, we take a leading position here at Baosteel. Our department has some 20 staff and the planning we do covers the distribution of the cargo transported. About 80 to 85 per cent of the finished products go to the domestic market, while the rest are exported.”
Travelling to the port, Ren Hong, who deals with Baosteel’s international shipping operations, talks about the challenges of getting the iron ore onto the factory grounds via grabs and long conveyor belts: “Our new island port – Ma Ji Shan Port – has a depth of 23 metres compared to the 13 metres here at the Shanghai port. For us, the larger the port and the larger the vessel, the more efficient the transport will be,” concludes Hong.
Baosteel has about 39,000 employees (2006), of whom some 23,500 are production staff, 11,500 are technical staff and around 3,700 are managerial staff. About half of the employees have a college or university degree.

Date: 30 January 2008