China Baowu Steel Group, the top steel mill in China and almost matching ArcelorMittal globally in production capacity, has passed the final hurdle towards getting a 51% stake in Taiyuan Iron & Steel Group (TISCO), with the final approval of the related authorities, and this will also enable it to soon pass the targeted 100 million tonnes/year installed capacity one year in advance, Mysteel Global understands.
It has taken over two months for the related regulatory body in China’s central government to investigate Baowu’s plan and to be convinced that no monopoly will be created as a consequence of the stake transfer, and the approval for stake transfer to proceed was granted on November 11, as stated in a press release from Shanxi Taigang Stainless Steel Co, TISCO’s Shenzhen-listed arm.
Last summer on August 21, Baowu and Shanxi province’s State-owned Assets Supervision and Administration Commission – the ultimate owner of TISCO – agreed that the latter would transfer TISCO’s 51% stake to Baowu free of charge.
TISCO, headquartered in Taiyuan, North China’s Shanxi province, hosts 12.6 million t/y crude steel capacity with 4.5 million t/y being stainless, making it China’s second largest stainless producer. Baowu, headquartered in Shanghai, also has stainless subsidiaries, Mysteel Global understands.
The release did not give a timeline for the completion of the stake transfer, but usually it is fast as no payment will be involved, and the acquiring of equity at no cost between Baowu-TISCO has been a rather common practice among mergers of state-owned steel mills in China, Mysteel Global notes, following the merger of Baosteel and Wuhan Iron & Steel in December 2016 to form Baowu, and of Baowu’s takeover of Ma’anshan Iron & Steel in East China’s Anhui province in June 2019, as reported.
Once the controlling stake in TISCO is secured, Baowu is certain to be the world’s largest steel mill with a combined steel capacity of over 110 million tonnes/year from its multiple subsidiaries, spanning North to South, West to East of China, and unlike ArcelorMittal, Baowu’s all existing steel assets are in China instead of distributed globally, Mysteel Global understands.
Written by Hongmei Li, li.hongmei@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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