Sweden’s Sandvik AB has announced the signing of a letter of intent with Zhuzhou Cemented Carbide Group Co., Ltd, China, to form a joint venture for strategic cooperation. Under the agreement the two companies intend manufacture products at Zhuzhou Group’s existing facilities in China, with products being sold and marketed in and outside China.
It was stated that, based on the strength of Sandvik Machining Solutions and the position of Zhuzhou Group, the ambition is to drive profitable growth and capture market shares in the fast-growing mid-market segment.
The Zhuzhou Group is the largest domestic manufacturer in China of cemented carbide and its compatible tools. It also offers smelting services for tungsten, molybdenum, tantalum, niobium and cobalt. The company is based in Zhuzhou, China, and the number of employees encompassed by the strategic cooperation is approximately 2,000. Annual sales for the part of the business concerned amount to about 1.3 billion RMB.
“The cooperation with Zhuzhou Group strengthens our position in one of our largest markets, China. It is also in line with our current strategy to become a key player in the mid-market segment, which has been growing in size and importance in recent years,” stated Jonas Gustavsson, President of Sandvik Machining Solutions.
“Expanding beyond the premium segment in the metal-cutting tool industry is an important part of Sandvik’s growth ambitions. This preliminary agreement is a significant step in that direction,” added Olof Faxander, Sandvik’s President and CEO.
The letter of intent between Sandvik and the Zhuzhou Group expresses the parties’ preliminary intention to negotiate a strategic cooperation. It does not impose any binding obligation on either party to enter into final and definitive agreements relating to the strategic cooperation.