ANSHAN, Liaoning - The merger between Anshan Iron & Steel Group and Benxi Iron & Steel Group will make substantive progress by the year's end, Anshan Steel Chairman Zhang Xiaogang said on Friday.
Anshan Steel announced in 2005 that it agreed to acquire Benxi Steel to form Anben Iron & Steel Group, however, the two firms have yet to transfer their operating assets to the new entity.
The companies' financial, sales and purchasing departments have yet to be integrated.
"The two firms will be merged by substantive steps by the year end," Zhang said at a breakfast briefing in Anshan.
Meanwhile, "Pangang Group will become Anshan Steel's subsidiary in July," Zhang said.
"Pangang will fill in Anshan Steel's gap in western China, and we will focus on developing Pangang's vanadium-yitanium products after the merger."
Anshan Steel received approval from the State-owned Assets Supervision and Administration Commission in May to bring Pangang into its fold.
The move is a part of Anshan Steel's bid to reach an annual production capacity of 60 million tons in the next five years.
The Liaoning-based steel company released the target on Thursday, and is aiming to become one of the world's top five steelmakers by 2015.
Combined with Benxi steel, Anben Iron & Steel Group produced 29.3 million tons of crude steel last year, coming fourth in the domestic market.
Zhang also said a significant amount of Chinese steel companies might suffer losses in July due to soaring raw material prices and falling steel product prices.
The government's scrapping of steel rebates starting from July 15 will put further pressure on Chinese steel mills.
"The situation will force more Chinese steel mills to cut production," he said.
Anshan Steel also wants to source 65 percent of its own iron ore to break through the monopoly of the three global miners - Vale, BHP and Rio.
"Anshan Steel Group currently sources 44 percent of its own iron ore, and will expand domestic iron ore production and overseas iron ore resources to reach the target," Zhang said.
The company's domestic iron ore mines produced 15 million tons last year.
Anshan Steel's Karara joint venture iron ore project in Western Australia will become operational in 2011, with a production capacity of 8 million tons next year.
By Zhang Qi
