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China’s Tangshan City Mulls Share Sale for $29 Billion Project
Tangshan, the city flattened in China’s 1976 earthquake, may sell shares to help finance a $29 billion industrial park, the centerpiece of the nation’s largest land- reclamation project.

Ownership of the Caofeidian Industrial Zone, including a port, may be transferred to two city-owned investment companies that would then offer stock to local or overseas investors, Xue Boxun, the project’s deputy director, said in an interview last week.

“We are looking for the quickest way to go public,” Xue said. He didn’t give a timetable for completing a stock sale.

Tangshan is seeking to reduce its reliance on state loans after the central bank pushed borrowing costs to a decade-high. Caofeidian burns through almost $12 million a day at what managers call “the biggest construction site in China,” where an area almost twice the size of Manhattan has been reclaimed from the sea.

The city, 220 kilometers (137 miles) east of Beijing, hasn’t submitted any application to the securities regulator for a share sale as it’s still working out “planning issues,” Xue said. Officials are studying ways to get around the regular stock sale process because it would take three years, he said.

Caofeidian may struggle to compete for private funds with other industrial zones in cities such as Tianjin, which is closer to Beijing and boasts an economy twice the size of Tangshan’s, said Wu Bin, who helps manage about $3 billion in Chinese stocks at Martin Currie Investment Management Ltd. in Shanghai.

“There are many options nearby that are already proven,” Wu said. “If they invest in Tianjin, that’s closer to the actual economy.”

Oil Shipments

Construction at Caofeidian started in 2003, and the project has cost 40 billion yuan ($5.8 billion) so far, said Tian Xiaolong, Caofeidian’s foreign investment director. The total cost may top 200 billion yuan by 2020, according to Tangshan’s Web site.

The 17-year Three Gorges Dam project, set to be completed next year, will cost an estimated 180 billion yuan, says the Web site of China Three Gorges Project Corp.

Caofeidian has 54 businesses operating now, including Beijing-based Shougang Corp., which is building a 67.7 billion- yuan steel works plant with Tangshan Iron & Steel Group, Xue said.

China Petroleum & Chemical Corp. and PetroChina Co. are building oil terminals and storage tanks to receive imported crude and supplies from the Bohai oilfield. Caofeidian will also receive oil shipments from the adjacent Nanpu field, which has estimated reserves of up to 3 billion tons, Xue said.

Supertanker Berth

It took three decades to rebuild Tangshan after China’s deadliest earthquake destroyed the city and killed 250,000 people, Chen Guoying, the city’s major, told reporters May 26. The May 12 temblor in Sichuan province has cost more than 69,000 lives and displaced at least 15 million people.

Caofeidian, the only deep-sea port in northern China that can dock a 400,000-ton supertanker, also ships iron ore to steel plants in northern China, coal to the south, and will deliver imported liquefied natural gas to Beijing and Tianjin, he said.

Construction crews, consisting of 100,000 workers and 50,000 large trucks and tractors, have flattened about 100 square kilometers (39 square miles) of sea shore. The landfill will triple in size by 2030, and half a million workers will be living and working in the industrial city, Tian said.

The cost of reclaiming land from sea is about 300,000 yuan per mu (0.07 hectare), cheaper than acquiring land around Tangshan, which can be as much as 800,000 yuan per mu, said Caofeidian Deputy Senior Director Zhang Zhibao.

While the project, a key feature of China’s 2005-2010 development plan, receives state development funds, Caofeidian also plans to target foreign investors, Zhang said.