EnGro Corporation, one of Asia’s largest producers of eco-friendly cement or Ground Granulated Blastfurnace Slag (GGBS), has signed a Memorandum of Understanding (MOU) to establish a joint-venture (JV) with Hebei Iron & Steel Group Company (HBIS) for the building of a GGBS manufacturing plant.

The JV plant will eventually have an annual production capacity of 2.4 million tonnes and when ready, the group’s total annual production capacity will be pushed toward the 6.6-million tonnes mark. Construction of the plant will take place in two phases, with Phase 1 having two production lines, each with a capacity of 600,000 tonnes per annum, set to be completed by 2010. The group will start Phase 2 upon the first two production lines having established a foundation for its market.

HBIS is engaged in the development, manufacture and sale of iron and steel products. It is today China’s largest steel enterprise with an annual production capacity of 31.6 million tonnes. It was formed when the government of Hebei province state-controlled Tangsteel Group consisting of TangShan Steel, Chengde Steel, Wuyang Steel and Xuanhua Steel further amalgamated with Handan Iron & Steel Group Company.

Under the proposed JV, EnGro will be investing RMB32 million ($48.4 million) and HBIS RMB48 million for Phase 1 of the manufacturing plant. EnGro will fund its equity contribution from internally generated funds, while the remaining RMB80 million will be secured through bank financing at the JV level. This is not expected to have a material impact on the net tangible assets and earnings per share of the group in the current financial year.