August 22, 2008

Wuhan Steel to buy Kunming Iron & Steel

Bloomberg reported that Wuhan Iron & Steel Group has agreed to buy Kunming Iron & Steel Group to secure raw material supplies and increase exports to Southeast Asia. Mr Luo Bingsheng deputy secretary of China Iron and Steel Association's told reporters in Beijing that Wuhan Iron & Steel Group would buy Kunming Steel.

Mr Zhao Hao board secretary of Wuhan Steel's listed unit also confirmed the purchase but declined to say how much Wuhan Steel will pay for the company based in the capital of Yunnan province which borders Burma, Laos and Vietnam. He added that “Buying Kunming Steel is part of our expansion strategy. We may buy more that will help us to access the Southeast Asian market and more mineral resources."

Adding Kunming Steel's 4.8 million tonnes will increase Wuhan Steel's production by about 35%. The acquisition may also help Wuhan Steel, landlocked in the central province of Hubei, increase exports to Southeast Asia.

China's government is backing mergers among steel makers to create companies better able to compete with overseas rivals and give them more power in talks with raw materials suppliers. Wuhan Steel Group took over Echeng Iron & Steel Group in January 2005 in a government transfer of the assets.