Baosteel Group, the mainland's top steelmaker, plans to take over smaller rival Panzhihua Iron and Steel Group, the mainland's 18th largest steelmaker, the China Times reported over the weekend.
'The State-owned Assets Supervision and Administration Commission [Sasac] is not satisfied with the work of Panzhihua Steel and has agreed to let Baosteel launch an acquisition of the Sichuan-based steel mill,' the paper quoted sources as saying.
The proposed merger would be the first between two big steelmakers under Sasac's direct control, the report said.
The asset supervisor was disappointed with Panzhihua Steel's progress in listing the whole group, with its reorganisation plan begun in August last year still to be completed, it said.
It believes the group does not fully use its vanadium and titanium resources, strategic metals used in the aviation, military and space industries.
Western Panzhihua city, where Panzhihua Steel is based, has 9.8 billion tonnes of mineral resources with plentiful iron ore, vanadium and titanium. Resources there account for 19.6 per cent of the country's iron ore, 62.2 per cent of its vanadium, and 90.5 per cent of its titanium.