China's Anshan Iron & Steel Group (Ansteel) inked an agreement Wednesday to invest in a US steel mill, despite opposition from some US lawmakers.

Under the joint venture agreement signed Wednesday, Ansteel will take a 14-percent stake in Mississippi-based Steel Development Co.

The deal, while small in size, is significant, as it is seen as a litmus test of US openness to Chinese investments.

It would be China's first investment in a US steel mill and is expected to have an annual capacity of up to 300,000 metric tons.

Construction of the steel bar plant, estimated to cost $8 billion, has already start and the facility is slated to begin production in the first quarter of 2012, according to a joint statement from the two companies.

The Ansteel and Steel Development venture will encompass construction of four mills to produce reinforcing bars used in infrastructure projects and one mill to make electrical and silicon grades of steel used in energy applications, according to the statement.

The project, which was first announced in a memorandum of understanding May 17, was met with resistance in early July from 50 members of the US Congressional Steel Caucus.

John Correnti, chairman of Steel Development, said lawmakers who opposed the investment deal were mainly from steel production bases.

Tang Min with the China Development Research Foundation, a State Council think-tank, said the issue is about business, not national security.

"The US has been buying most steel products it uses from overseas. Now China is trying to build a plant there to lower its purchase prices. (Therefore), how can it be considered a threat?" Tang told the Global Times on the sidelines of the Second Summer Palace Dialogue between Chinese and American economists.

The US currently imports from Turkey, Spain and South Korea.

Last month, American Chamber of Commerce in China Chairman John Watkins said in the Asian Wall Street Journal that Chinese investments have a positive effect on US companies, in particular, start-ups like Steel Development.

The project will require approval by both US and Chinese authorities.