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UPDATE 1-Baosteel says expects result of Nippon talks in Q1

(Adds quotes, details)

SHANGHAI, Dec 23 (Reuters) - Baoshan Iron and Steel Co , the listed arm of China's largest steel maker, said on Monday it expected talks on building a plant with Nippon Steel Corp to yield results in the first quarter of 2003.

In November, the Japanese steel giant said it was in discussion with Baosteel to build a Shanghai plant to make steel sheets for the booming Chinese car market. Japanese media said the investment was worth 120 billion yen ($1 billion).

Nippon Steel officials have said the Shanghai plant would give the Japanese company a strong foothold to supply Japanese automakers in China, strengthen its leading position in Asia and counter new rival JFE Holdings Inc .

"We could see the result of the negotiations in the first quarter of next year," Ai Baojun, president of the Shanghai-listed Baosteel, told a news conference.

There were no immediate plans to raise funds for the project, Ai said.

"We have enough cash to finance our growth plan. We don't plan to raise any more funds right now, but for a long-term development, we can't exclude the possibility of adjusting our equity structure," he said.

"Given the state of the world economy and steel industry, we believe that the cooperation could be mutually beneficial," Ai said, but did not elaborate.

Baosteel said separately in a statement on Monday it would begin constructing two plants with a combined investment of more than 12 billion yuan ($1.45 billion).

A heavy plate rolling line will begin operations in April 2005 and its supporting process for continuous tasking will come onstream in December, Baosteel said.

The second plant, a cold rolling steel strip manufacturing line, will begin operations in March 2005.

Output from the two plants would be used in the development of industrial materials for cars, household appliances and buildings, Baosteel said.

Baosteel's Shanghai-listed A shares were flat at 4.20 yuan on Monday. Nippon Steel's Tokyo shares closed at 139 yen each on Friday. The Japanese market is closed on Monday for a national holiday. (US$1 = 119.60 yen) (US$1=8.280 Yuan)