The merger between steelmakers Anshan Iron & Steel Group and Benxi Iron & Steel Group is gaining momentum with the government's appointment of a chairman shortly to head the integrated entity, a mainland newspaper has reported. A senior official of the Liaoning provincial government, where the two companies are based, will be appointed as the chairman and internal party head of Anben Steel Group, a loose alliance formed in August 2005, 21st Century Business Herald reported yesterday. It quoted unnamed sources as disclosing that Zhang Xiaogang, Anshan Steel general manager, will be appointed combined group general manager, and Benxi Steel chairman Yu Tianchen will serve as group vice-executive general manager. The report said it would be a critical step to restructure personnel, procurement procedures, production and sales network and eventually merge the two groups into one. At present, Anben Steel is relying on only one committee with members from both groups to work out details of the merger proposal. The restructuring plan on personnel and operation has been submitted to the State Council and is expected to be approved in the first quarter. However, a restructuring of the shareholding would take longer, the newspaper said. The lengthy merger reflected the difference in central and local governments' interests, said Helen Lau, a Daiwa Securities analyst. Anshan Steel is owned by the central government while Benxi Steel is held by the Liaoning government. 'Who will head the merged group? How will the tax revenue be allocated? How big a stake can the local government get in the merged group? All these are major issues that need to be resolved,' Ms Lau said. Previous mainland newspaper reports have suggested that the Liaoning government could own a 33 per cent stake in the combined group. An Anshan Steel spokesman yesterday said he was 'unaware' of the restructuring plan and personnel change. No Benxi Steel spokesman could be reached for comment.