The Shanghai Baosteel Group Corp., China's largest steel producer, is to cooperate with the China State Shipbuilding Corporation (CSSC) to construct the country's largest shipbuilding base.

According to an agreement signed last Friday, the Baosteel and CSSC will jointly invest 10 billion yuan (1.25 billion U.S. dollars) to build the No. 1 and No. 2 production lines at the Jiangnan Changxing Shipbuilding Base, located at the estuary of the Yangtze River.

Baosteel will take a 35-percent stake and CSSC a 65-percent stake in the two production lines, which are designed to manufacture ships with 4.5 million dead weight tons (dwt) annually.

Construction of the lines had begun and the project had attracted orders for ships with combined capacity of more than seven million dwt, sources with the project was quoted as saying by China Securities Journal.

CSSC, parent company of 60 subsidiaries covering ship building, ship repair, research and development and offshore engineering, posted a profit of more than five billion yuan last year, more than 60 times that of 1999 when it was established.

CCSC has finished manufacturing 103 new ships for civil use, about 6.02 million dead weight tons (dwt) in total, last year, accounting for 43 percent of China's total output and 8.2 percent of the world's total.

CSSC became the world's third largest shipbuilding conglomerate last year, behind the Republic of Korea's Hyundai Heavy Industries and Japan's Imabari Shipbuilding Company.

Baosteel is one of the most profitable steel enterprises in the world with an annual production capacity of over 20 million tons. It ranked 296th on the 2006 list of Fortune 500 companies.

Besides iron and steel production, the conglomerate, established in 1998, is also involved in trade, finance, engineering, information and the processing of steel products.

Source: Xinhua