China’s Benxi Iron and Steel Group is no longer part of an auction to sell stakes in state-owned firms to strategic investors, official list shows, amid rumors that a long postponed merger with local rival Anshan Iron and Steel (Angang) is set to resume.
The Liaoning Shenyang United Assets and Equity Exchange, a government-backed investment platform, said last month that stakes in nine government-run enterprises would be put up for sale to help promote mixed ownership, one of the main goals of China’s ambitious reform program for state-owned firms. Benxi Steel was one of the nine firms, according to the exchange’s notice.
But Benxi Steel, one of China’s oldest mills, is not part of the auction list anymore, according to a revised list of participants released by the exchange on its website. (www.sprtc.com)
Chi Jingdong, the vice-secretary general of the China Iron and Steel Association (CISA), said on Monday that Benxi Steel’s merger with Angang would be next on the list of priorities following the restructuring of Baoshan Iron and Steel and Wuhan Iron and Steel.
“I can tell you today that the next merger target promoted by the state is the Anben merger,” he said. “Research will begin immediately and we will know by the end of the year.”
Benxi Steel could not immediately be reached for comment, but the listed unit of the Angang Group, Angang Steel , said on Tuesday that it had no knowledge of any new plans to restructure the two firms.
The proposal to merge the two northeast Chinese steel firms appeared as early as 2005, but negotiations soon foundered as a result of bureaucratic complications and concerns that it would cause damaging job and revenue losses in the city of Benxi.
Benxi Iron and Steel has total assets of 141 billion yuan ($21.14 billion) and liabilities of 105.6 billion yuan, a liability-to-asset ratio of 75 percent. It made losses of 7.95 billion yuan in 2015, according to the Shenyang exchange.
China’s five-year plan for the steel industry published in 2011 said that 60 percent of the country’s total steel output should be controlled by the 10 biggest firms by 2015, but the rate actually fell to 34.2 percent, down from 48.6 percent in 2010, with officials blaming stiff competition from small private producers for the failure. China now aims to reach the 60 percent threshold by 2025. ($1 = 6.6708 Chinese yuan) (Reporting by David Stanway; Editing by Muralikumar Anantharaman).
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Source: Reuters.com
