02 Maret 2009
Baosteel to Take Control of Ningbo Steel

Baosteel Group Corp., one of China's biggest steelmakers, has agreed to take a controlling stake in smaller rival Ningbo Iron & Steel Co., a report said Monday, the latest step in a government-backed consolidation of the industry.

Shanghai-based Baosteel will spend 2.02 billion yuan ($295 million) for a 56.15 percent stake in Ningbo Steel, with provincial steelmaker Hangzhou Iron & Steel holding the remaining 43.85 percent, the state-run newspaper Shanghai Daily reported.

The move was widely expected amid a restructuring of the industry aimed at consolidating smaller, less efficient steel mills into larger, more competitive conglomerates.

Ningbo Steel was set up in 2003 as a privately owned steel maker but its owners sold their combined 56.15 percent holdings last year to the provincial government in Zhejiang, which is adjacent to Shanghai.

Although Ningbo Steel was losing money, it has a strategically important location next to Ningbo's major Beilun Port, Shanghai Daily said.

Ningbo Steel produced about 4 million tons of steel last year, compared with 30 million tons for Baosteel, one of the country's most modern steel makers.

China is the world's biggest consumer and producer of steel. Last year its steel mills turned out 500.5 million tons of crude steel, well below the industry's capacity of 660 million tons, according to government figures.

(Source: SEAISI Website)

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