Shaanxi merges three steel mills into one unit

PUBLISHED : Wednesday, 13 May, 2009, 12:00am
UPDATED : Wednesday, 13 May, 2009, 12:00am

Shaanxi's provincial government is responding to Beijing's calls for consolidation of the fragmented steel industry by merging its three mills into one company.

Shaanxi Iron & Steel Group will control the operations of Shaanxi Longmen Iron & Steel, Shaanxi Lueyang Iron & Steel and Shaanxi Hanzhong Iron & Steel Group, according to a statement on the Shaanxi Provincial National Development and Reform Commission's website.

An official from the provincial NDRC's industry department said the new group would maintain the current annual capacity of about 6 million tonnes.

'No timetable has been set for the restructuring, but we hope to do it as soon as possible,' the official said.

One of the aims of the restructuring was to upgrade the province's steel-making technology and get rid of outmoded practices. At present, there was no plan for capacity expansion, he said.

The move is in line with similar mergers in Hebei and Shandong provinces last year that were part of the State Council's plan to speed up consolidation of the industry.

However, as Shaanxi was a small steel-making province, accounting for only 0.9 per cent of the country's capacity or 0.6 per cent of crude steel output last year, the formation of Shaanxi Steel Group was unlikely to have any real impact on the market, said Xu Xiangchun, the chief information officer of Beijing Ganglian Maidi e-Commerce, a provider of steel data.

Mr Xu expected similar government-directed mergers in the future.

Hebei Iron & Steel Group was formed from the merger of Tangshan Iron & Steel Group and Handan Iron & Steel Group in the northern province, while Shandong Iron & Steel Group was a result of the merger between Laiwu Steel Group and Jinan Iron & Steel Group in the eastern province.

Hebei is the country's largest steel-producing province, accounting for about 20 per cent of the total output, while Shandong is the third-largest.

No expansion plans

A provincial official says the group will maintain annual capacity of, in tonnes: 6m