Top Chinese steel firms will merge to create global titan
China"s second- and fifth-largest steel mills announced an ambitious merger yesterday that would form a global giant and make it one of the world"s top players.
Anshan Iron & Steel Group and Benxi Iron & Steel Group would merge to form Anshan-Benxi Steel Group, the firms advised the Shenzhen bourse.
The statements called the consolidation merely "a co-operation between the two groups", where "no stake issues are involved between the two companies". Both mills are owned by the state.
The merger, which comes amid a major government-directed overhaul of the industry, could surpass the 20 million tons of production pumped out annually by China"s market leader, Shanghai-based Baosteel.
The new group could target other local private steel firms to allow its steel output to reach 51 million tons by 2010 and to become one of the world"s top three steel producers, analysts said.
Mittal Steel of the Netherlands and Arcelor, a European consortium, are the largest.
The statement said the new group would have a joint board of directors, annual investment planning, marketing at home and abroad, resource allocation, and research and development.
The move follows the unveiling of Beijing"s long-term policies for the development of the domestic steel sector last month, which have in effect decreed the consolidation of the sector"s super-fragmented state.
To strengthen the industry, Beijing is planning to merge many of the sector"s 871 steel producers, less than 2 percent of which are capable of annual production above 5 million tons.
The new portfolio calls for China"s 10 largest steel makers" combined output to be boosted to more than 50 percent of the country"s total by 2010, and more than 70 percent by 2020.
As the world"s largest producer of crude steel, China has spent billions of dollars on upgrading its steel makers so they can compete with global rivals.
In July the government implemented a plan that has restricted investment in its steel industry by barring foreign companies from taking controlling stakes, much to the dismay of other steel makers keen for a slice of the action.
China"s output reached 272.8 million tons in 2004 and was expected to rise to 332 million this year, state press reports said.
Anshan Iron & Steel Group and Benxi Iron & Steel Group would merge to form Anshan-Benxi Steel Group, the firms advised the Shenzhen bourse.
The statements called the consolidation merely "a co-operation between the two groups", where "no stake issues are involved between the two companies". Both mills are owned by the state.
The merger, which comes amid a major government-directed overhaul of the industry, could surpass the 20 million tons of production pumped out annually by China"s market leader, Shanghai-based Baosteel.
The new group could target other local private steel firms to allow its steel output to reach 51 million tons by 2010 and to become one of the world"s top three steel producers, analysts said.
Mittal Steel of the Netherlands and Arcelor, a European consortium, are the largest.
The statement said the new group would have a joint board of directors, annual investment planning, marketing at home and abroad, resource allocation, and research and development.
The move follows the unveiling of Beijing"s long-term policies for the development of the domestic steel sector last month, which have in effect decreed the consolidation of the sector"s super-fragmented state.
To strengthen the industry, Beijing is planning to merge many of the sector"s 871 steel producers, less than 2 percent of which are capable of annual production above 5 million tons.
The new portfolio calls for China"s 10 largest steel makers" combined output to be boosted to more than 50 percent of the country"s total by 2010, and more than 70 percent by 2020.
As the world"s largest producer of crude steel, China has spent billions of dollars on upgrading its steel makers so they can compete with global rivals.
In July the government implemented a plan that has restricted investment in its steel industry by barring foreign companies from taking controlling stakes, much to the dismay of other steel makers keen for a slice of the action.
China"s output reached 272.8 million tons in 2004 and was expected to rise to 332 million this year, state press reports said.