China's Shougang Corp aims to double iron production at its Peruvian unit as demand from Chinese steel makers surged, Peru Energy & Mines Minister Juan Valdivia said.

Shougang, the parent company of Beijing Shougang Co, China's second-biggest producer of construction-grade steel, plans to invest US$700 million in the next two years in Shougang Hierro Peru SAA, Peru's only iron miner, Valdivia told reporters. Peru's government is counting on US$13 billion in mining investments to help drive economic growth of seven percent annually over the next four years. Shougang Hierro Peru increased iron output by seven percent to 5.1 million tons last year, according to Peru's Energy and Mines Ministry.

"We talked with the president of Shougang and the company has a new business policy," said Valdivia, who returned last week from a trip to China. "The company will also invest in the pier, the electricity service and sidewalks."

Shougang took over the Hierro Peru mine, 530 kilometers south of Lima, from the state in 1993. Iron ore prices have climbed sixfold since January 2000 to US$194 per ton now in China, according to Lehman Brothers Inc.