October 13, 2008

Shagang to acquire Henan\'s Yongxing Steel

China local media The Economic View reported that Jiangsu Province based Shagang Group signed an agreement with Henan's Yongxing Iron & Steel Co Ltd on September 24th 2007 to acquire 80% stake and incorporate a JV. This represents first cross region merger of China's private steel mills, and a start of consolidation in Henan Province.

Shagang, as China's largest private steel maker, owns total assets of CNY 60 billion per tonnes and pig iron, crude steel and steel product capacity of 15 million tonnes, 18 million tonnes and 18 million tonnes respectively. Among China's 500 top manufacturers, Shagang ranks 23. Shagang targets Yongxing Steel for bigger dimension, market and sharper competitive strength.

President of the Shagang group noted that "Shagang want to incorporate the growing steel mills to realize its goal of edging into world top 500."

Board chairman of the Henan based steelmaker projected said that "We'd try to complement each other's advantage and share resources to enable the JV to make CNY 20 billion sales income and 2 billion pretax profits within three years."

Mr Shen Wenrong said "We will launch the new area's 1st phase of 1080cu.m blast furnace, sintering machine and stockyard as well as 120t converter and billet/slab conti casting project once the JV is built, and redesign Yongxing Steel's former investment plan in automation controlling system and project the second phase program. We target 5million tonnes per year to 5.5 million tonnes pear year capacity of the JV in 3 to 4 years."

The president revealed that China's steel consolidation is pushed forward by policies. For Shagang, the M&A process will proceed from the nearby to the farther, the smaller to the bigger, the domestic to the international and Yongxing Steel would never be the last.

(Sourced from MySteel.net)