Steel Industry

Smelters vying for Tonghua Steel

By Yu Hongyan (chinadaily.com.cn)
Updated: 2009-12-03 10:50

Three of China's top steel makers are looking to purchase Tonghua Iron & Steel Co Ltd in Jinlin province, months after a Beijing company's merger of the smelter flopped due to a worker protest in July, the China Business News (CBN) reported today.

The state-owned Tonghua Steel is the largest steel maker in northeast China's Jinlin province. After years of loss, it began to make profits in June this year.

The rebound prompted the privately-owned Beijing Jianlong Heavy Machinery Group to buy a controlling 65 percent of Tonghua in July. Just four months earlier, Jianlong had pulled out of Tonghua Steel due to its continuous losses.

But the latest deal got halted after a worker protest broke out in July, with a man managing the acquisition beaten to death. Anshan Iron and Steel Group Corporation (Ansteel), China's second-largest steel maker, is the most probable winner among the current bidders, as it is located in the adjacent Liaoning province in northeast China, the CBN said, citing people familiar with this matter.

But the other two bidders may also stand out due to their experiences in merger and acquisition, the paper said.

Shougang Group, China's eighth largest steel maker, took over three domestic steel makers this year. It plans to expand its annual production capacity to 30 million tons by 2012 with new projects in Hebei province and consolidation, according to a previous China Daily report.

Meanwhile, the Valin Iron, the country's ninth-largest mill, secured its bid for Australia's third largest miner Fortescue Metals Group earlier this year. The success of its bid for Tonghua Steel would enable the Hunan-based smelter to tap the northern China market.