Work is about to start on a project that may help Guangdong's capital Guangzhou realize its goal of becoming the biggest auto production base in the country.

Construction of the 1.8-million-ton cold-rolled steel plate project is expected to begin before the end of this year.

Guangzhou JEF Steel Plate Co Ltd, a joint venture between Guangzhou Steelworks and Japanese steel giant JEF, is expected to invest more than 6.35 billion yuan in the project, according to a Xinhua report.

Guangzhou Steelworks and JEF signed a contract earlier this week on the construction and operation of the facility, which was approved by the National Development and Reform Commission in June.

Guangzhou Steelworks and JEF signed a letter of intent for the project when the joint venture was established in March.

Located at the mouth of the Pearl River in the city's Nansha Development Zone, the project is expected to start operation in two and a half years.

It will mainly produce quality steel plates for cars, high-grade electric appliances and the construction industry. JEF brings advanced steel production technologies to the venture - it is one of the few steelworks that produce high-quality steel plates for cars.

The facility will supply the mainland market as well as the Southeast Asian region.

The project is expected to boost the development of the city's steel and auto industries, according to an official from the municipal government.

"It will help narrow the gap in the supply of steel products in the prosperous Pearl River Delta region and help Guangzhou Steelworks further improve its industrial structure," the unnamed official was quoted by Xinhua as saying.

Guangdong is a province with big demand for cold-rolled steel plating. It needs more than 10 million tons every year. Half of the supply is imported, while the rest is bought in from other areas in the country.

This supply gap is set to widen by 2010, when the province's annual demand for the product grows to more than 14 million tons.

Guangdong has already established itself as a major household appliance production base.

(China Daily August 10, 2007)