According to Mr Wang Jiansheng deputy mayor of the capital city Taiyuan, Taiyuan Iron & Steel Group, the top state run steel mill in North China's Shanxi province, is in takeover talks with local Meijin Iron & Steel Co Ltd.
It will be the first acquisition case in local for Taigang if the deal succeeds. And insiders of Mejin also confirmed the recently that "Taigang may whole buy, or at least control Meijin. However, an official from Taigang's publicity department claimed unaware of the deal.”
As a private steel mill with total investment of CNY 1.8 billion, Meijin Steel has annual capacity of 2 million tonnes of quality specialty steel, and belongs to Shanxi Meijin Energy Group, the largest privately owned diversified coking enterprises in local, which has a listed arm Meijin Energy.
According to an industrial research report in this February Mejin Energy Group boasts annual coke output of 3.3 million tonnes, cleaned coal dressing capacity of 10 million tonnes; coal tar, 0.15 million tonnes, crude benzol, 50,000 tonnes and transport capacity of 10 million tonnes. The Group has assets of CNY 8.5 billion. However, the unfolding global financial crisis also negatively impacted the group, and forced it to cut production due to the continuous coke and steel prices fall. And that explain why it wants to sell the steel mill.
And a coal expert speculates the group will incur loss in short term, with gross profit margin to post at negative 22%, negative 17% and 4% respectively in this and the next two years.
Mr Yao Jinchen Deputy President of the group acknowledged this January to a local media that despite a production cutback, the group was still under losses. And the group has cut all employees' salary by 10%t at last year end.
Secretary-general of Shanxi Iron & Steel Association said "The acquisition is in Taigang's long term development strategy due to its special-steel oriented product mix. And insiders of the Shanxi top mill also disclosed that Taigang will not hold steps after the deal, and is mulling to consolidate common carbon steel companies.”
(Sourced from.Mysteel.net)
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