"Pave the Way":

Promoted "Made in China" to Enter the South American Market

The construction process of the Hierro Peru New District Project not only created a new construction model of Shougang's overseas engineering projects, but also promoted the competitiveness of the relevant units of the Group, and paved the way for the idea of “made in China” to settle in Peru. It successfully united China Railway, CITIC Heavy Industries and other Chinese-funded enterprises to develop business abroad and realized the overseas export of a large number of domestic advanced technology and equipment, helping Chinese-funded enterprises to use this as a starting point to “borrow the ship to go abroad”, further expanding the Peruvian and South American markets, and also vigorously promoting the rapid development of the local economy in Peru, thus becoming a local "golden business card".

—— Promoted linkage between domestic suppliers and group business

In the domestic equipment bidding procurement process, the steel plate business and the supplier's equipment manufacturing were linked, such as electrical equipment (transformers, electrical cabinets) suppliers’ silicon steel and related materials were supplied by the designated silicon steel business department of the Share Company, steel materials required by the plant steel structure suppliers were supplied by Shouqin Company and the Share Company. Shougang Automation Information Technology Co., Ltd. is responsible for the equipment supply and construction commissioning of the Hierro Peru Company’s automation control, communication and instrumentation. The above-mentioned business linkage not only met the equipment supply needs, but also drove the improvement of the related business of the Group. At the same time, Hierro Peru Company took the responsibility of guaranteeing the Group’s furnace materials, repeatedly conducted experimental research, optimized the process flow and improved product quality to provide high-quality furnace materials for the Group's main steel process to maximize the Group's interests.

—— Promoted the market competitiveness of relevant units of the Group

CSGI had multi-channel management in project execution. In terms of project quality, it was necessary to guarantee quality and the construction period. It insisted on “reducing procurement costs, strengthening process control, improving equipment quality, and establishing group brand” as the primary tasks. In terms of the project organization mode, it made great effort to change the previous overseas engineering one-stop mode, proceed from the whole situation, independently faced 33 domestic and foreign suppliers, independently completed the bidding and evaluation organization and effectively saved equipment procurement costs of more than 60 million yuan. Under the circumstances of process adjustment, slow engineering design, frequent changes in drawings, changes in brand models, increased scope of supply, limited production of environmental policies, congestion at shipping ports and other adverse factors that hindered the manufacturing and delivery schedules, it started from meeting the needs of Hierro Peru project courageously and actively and overcame all difficulties. It had repeatedly proposed a number of measures such as “multiple travel to manufacturers to participate in production scheduling and supervision”, “adjusting the processing technology to compress the manufacturing period”, “flexible adjusting the shipping ports to avoid port congestion affecting shipment”, “suppliers’ instant shipment of products produced to eliminate impacts arising from weather, environmental protection and limited production", "combination of sea and air transport to effectively shorten the time of arrival", “actively promoting the Group's electricity payment to reduce financial expenses”, “changing the supervision of the company's inspection to on-site inspection to strengthen the manufacturing quality control", "establishing a safety management system and signing ‘Safety Responsibility Guarantee’ with suppliers and individuals”, and “multi-channel handling visa Procedures to go to Peru”, and actively coordinated various matters with suppliers within and outside the Group. It had completed 65 batches of manufacturing and shipping work of 131,000 pieces of equipment, steel structure and material with a total weight of 38,000 tons and a total volume of 135,000 cubic meters. It also had an equipment production rate of 90% and completed a total of 76 people’s visa application procedures to go to Peru. All these had further promoted the Shougang brand to go abroad and accumulated experience in undertaking and executing projects, further increasing the ability for overseas engineering contracting and strengthening the confidence and determination of overseas engineering contracting.

—— Effectively promoted exports of the “made-in-China” and established a Chinese brand

The construction of the New District Project not only drove the export of the “made-in-China” and design consulting services to Peru, but also promoted the entry of Chinese engineering companies into the Peruvian mining market by participating in the construction of the New District Project. A number of Chinese-funded enterprises such as China Metallurgical North, China National Hydropower, China Communications Construction, China Railway Group, China Metallurgical 19th Bureau and CITIC Heavy Industry participated in the design, equipment supply, civil construction and electromechanical installation of the Hierro Peru New District Project. The project contractual amount had exceeded 200 million US dollars. With the platform of the construction of the Hierro Peru New District Project, the sales of much Chinese equipment in Peru and South America have been further promoted. Many Chinese-funded enterprises have also entered the Peruvian mining construction market and are gradually expanding their influence. Among them, China Hydropower has completed its first project in Peru; China Communications Construction has completed the first and second projects in Peru; the 19th Bureau of China Metallurgical and CITIC Heavy Industries have established branch offices in Peru and assumed the first project to establish itself in Peru and open the South American market.

—— Promoted local employment, stimulated local economy and made the relationship between Hierro Peru and community residents more harmonious

Since the official start of the Hierro Peru New District Project in 2013, the on-site construction has involved 2,000 people on the site for a long time. After the project was put into operation, more than 200 operators and management personnel have been required, which greatly drives the local employment. With the help of the Hierro Peru New District Project, Hierro Peru Company has organized 6 batches of nearly 20 Peruvian employees to go to China to check the equipment, which made them deepen the impression of China and have a deep understanding of China's social development. At the same time, with the help of the project approval and equipment technology services of the Hierro Peru New District, Hierro Peru Company and the Peruvian government had more and deeper exchanges, which enabled the Peruvian government to deepen their understanding of Hierro Peru Company and promote the friendship between China and Peru.

Shougang interprets the connotation of the “Belt and Road” and “Model Project” of international capacity cooperation with practical actions. It has a strong reference for other domestic enterprises to use engineering projects as carriers to innovate and promote international production capacity and equipment manufacturing cooperation.

Nowadays, the follow-up construction of the Hierro Peru New District Project is still going on. The settlement and development of Shougang’s people on the other side of the ocean will surely create again engineering construction miracles in the desert in a foreign country, and write a new chapter in the deep friendship of the peoples of China and Peru.