BEIJING Shougang Co plans to invest 6.4 billion yuan (US$866 million) in a venture to produce cold-rolled steel with its parent and an auto maker, the steel mill said yesterday.

Beijing Shougang will take a 70.28-percent stake in the venture, which will have a registered capital of 2.6 billion yuan, it said in a statement to the Shenzhen Stock Exchange. The company will inject capital and fixed assets into the venture, based in Shunyi on the outskirts of the national capital.

Its state-owned parent, Shougang Group, will own 9.72 percent by contributing land while Beijing Automotive Investment Holdings Co, a partner of South Korea's Hyundai Motor Co, will hold 20 percent by providing cash, the statement said.

The proposed venture needs shareholders' approval.

The venture will operate a plant that will produce 700,000 tons of cold-rolled steel and 800,000 tons of galvanized sheets a year. The products will serve the auto and home appliance industries, among others, and will mainly target markets in the north of the country.

Chinese steel makers are increasing production for such products with higher added value to meet rising demand from the auto sector.

Construction of the plant started in July, 2005 and production is expected to start by the end of the year.

Shougang is relocating its operations outside downtown Beijing to Shunyi and Caofeidian to reduce pollution in the city before next year's Olympic Games.