CAMP HILL, Pa. -- Worldwide industrial services and engineered products company Harsco Corporation (NYSE:HSC) announced today its signing of a 20-year services contract for the environmentally-beneficial handling and processing of steelmaking by-products with Tangshan Iron & Steel, the flagship site of China's largest steelmaker, Hebei Iron & Steel (HBIS) Group, the second largest producer of steel in the world.
The contract significantly expands Harsco's existing resource recovery services at the Tangshan works under a new joint venture relationship led by Harsco that focuses directly on improving the surrounding environment from steelmaking operations. At anticipated production levels, the new agreement is expected to generate revenues in excess of $375 million over its duration.
The contract signing was marked by official ceremonies held last week in Hebei Province and attended by senior Company and government officials. Mr. Yu, Yong, Chairman and President of Tangshan Iron and Steel Group (Tangshan Steel), said at the ceremony, 'Harsco is one of the premier service providers to the steel industry. It has state of the art technology and a team made up of dedicated professionals. In the past ten years since our cooperation started, Harsco has shown the world the best services in slag processing. They have made great contributions to protecting the environment of the city of Tangshan.
'This new project is a new beginning,' Chairman Yu continued. 'While return on investment is important, Tangshan Steel takes more seriously what returns this project can bring to society in improving the environment. We are confident that, by working with Harsco, we will see the best return in achieving this goal. I wish great success to this project and to the cooperation between Tangshan Steel and Harsco.'
Galdino Claro, CEO of the Harsco Metals & Minerals business group, added, 'Chairman Yu is a visionary leader known for his determination and success in creating a new ecological image for the steelmaking industry. We at Harsco are immensely proud to have been selected by him to implement his vision through our technological expertise and execution ability. This is an important win for Harsco with a very significant customer. Tangshan Steel is among the best managed steel operations in the world and recognized as a benchmark for operational efficiency and housekeeping.'
The new agreement will encompass advanced slag treatment processes to quickly cool and treat BOF slag for significant reductions in environmental impact versus traditional methods, along with high-efficiency metal recovery and the manufacture of environmentally-friendly co-products from the residual slags, which will be sold by Harsco for beneficial reuse into the cement, concrete and road base infrastructure markets.
The agreement is seen as a foundation for further areas of cooperation between Harsco and Tangshan Steel as well as the greater Hebei Iron and Steel organization. 'Our cooperation has a very broad basis and great potential,' said Chairman Yu. 'We should start exploring immediately other areas and other projects we can do together.' In this regard, discussions are already underway to expand Harsco's existing services at the Jing Tang Plate Mill, which is another Tangshan Iron and Steel-controlled entity, to include similar co-product manufacture and sale for environmental reuse in various commercial markets. While still subject to further discussions, Harsco's expanded role at the Jing Tang works is seen as adding as much as $80 million in additional revenue potential.
The Tangshan agreement parallels Harsco's similar joint venture agreement with China's TISCO, another major Chinese steel producer that ranks as the world's leading producer of stainless steel. That agreement, announced late last year, marks the largest contract in Harsco history, with the potential for generating new revenues in excess of $500 million over its 25-year term. Under the TISCO agreement, Harsco will apply its proprietary separation technologies to extract high-value metallic content from TISCO's steelmaking slag for production re-use. In parallel, Harsco will also develop commercial market opportunities throughout China for utilizing stainless slag co-products to revitalize potentially thousands of acres of prime agricultural croplands and contribute to a broad range of industrial applications.
The Tangshan Steel agreement adds to the record level of major contract awards announced last year by the Harsco Metals & Minerals group totaling more than $1 billion in projected future revenues over their duration, as well as new contracts already announced this year totaling an additional $170 million in projected long-term revenues. At expected production levels, the group's multi-year service contracts represented an estimated $3.7 billion in projected future revenues as of December 31, 2011, providing the Company with a substantial base of long-term revenues.
Harsco Corporation is a diversified industrial company that is helping build the world by providing essential services and products to fundamental global industries, including steel and metals production, construction, railways and energy. Harsco's common stock is a component of the S&P MidCap 400 Index and the Russell 1000 Index. Additional information can be found at www.harsco.com.
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