Baosteel eyes stake in 19b yuan mill
Baoshan Iron and Steel, the listed arm of the mainland's largest steelmaker, said it might buy its parent's stake in a planned 19 billion yuan steel mill when the time is ripe.
The firm's board approved a proposal by parent Baosteel Group to build a 4.6 million tonne a year steel mill in Handan, Hebei province, with Handan Iron and Steel Group, it said in a statement filed with the Shanghai Stock Exchange yesterday.
Baosteel Group and Handan Steel will set up a 50-50 joint venture with a registered capital of 12 billion yuan to build the mill, according to a letter of intent they signed in May.
Total investment in the mill will reach 19.4 billion yuan and it is expected to be completed by 2010.
Baoshan Steel has the first right to invest in and buy steel-related projects that its parent plans to invest in when they are completed, to avoid competition between the two companies.
This is in accordance with a commitment Baosteel Group made when Baoshan Steel went public in December 2000.
The listed firm said the board decided not to invest in the Handan project until the project was completed and was running at full capacity in a few years time.
It would, however, reserve the right to buy its parent's stake, the statement said.
Baosteel Group said it aimed to more than double its steel production capacity to 80 million tonnes by 2012 through mergers and acquisitions in the mainland and overseas.
If it reaches this target, Baosteel would become one of the world's top three steelmakers, its internal newspaper the Baosteel Daily reported this week.
The group, currently the world's fifth-largest steelmaker, has a capacity of 30 tonnes.
Most of Baosteel Group's steel-making assets are in the hands of Baoshan Steel, which said last week it aimed to have an annual capacity of 50 million tonnes by 2012.
Baoshan Steel shares closed yesterday up 2.4 per cent at 19.57 yuan.