Novo Group says Iron and Steel Resources Limited (ISRL), a subsidiary of the company, has obtained a letter of approval from the local the Chinese authorities that a 500m long Yangtze River coastal line together with 333,000 sqm of land be reserved to ISRL.

On the land reserved, Novo says a scrap processing plant will be constructed for scrap processing, cutting and slitting of steel products. It is expected that the plant will start its production in 2011 and shall have a production capacity of 2 million tonnes. To facilitate this plant, two public piers which are able to handle 50,000 tonnes of iron ores and steel products to be imported and exported, will be built.

The processing plant, with initial processing capacity of 1 million tonnes, will add benefits to the electric furnace manufacturers, ship-destruction business and logistic of scrap processing in Jiangsu Province.

The estimated capital expenditure investment of US$24 million ($33.4 million) will be injected by a local subsidiary of ISRL, which was incorporated in China.

Novo says the transaction will be funded through internal resources.