| China: Chongqing Steel denies merger talks with Baosteel |
BEIJING, August 7 -- Chongqing Iron & Steel Group Ltd, the smallest of China's three Hong Kong-traded steelmakers, said it's not in talks to merge with bigger rival Baosteel Group Corp, denying a report by the Interfax news agency.
Baosteel, China's biggest steelmaker, wants to increase its market share in the country's northwestern and southwestern regions by buying Chongqing Steel, Russia's Interfax reported on Friday, citing a Baosteel official it didn't identify.
"The merger talk is complete nonsense," said Dong Xingling, head of Chongqing Steel's press relations department in Southwest China's Chongqing Municipality. "We are concentrating on our own production and sales."
State-owned Baosteel, which produced 6 per cent of China's steel last year, is leading a government push to combine the country's producers of the metal to curb excess investments, reduce wastage and cut energy usage. Shanghai-based Baosteel tried unsuccessfully to buy Jinan Iron & Steel Group Co in East China's Shandong Province, after agreeing on July 5 to take over Guangdong Shaoguan Iron & Steel Group.
"China's government is encouraging mergers and acquisitions among the country's steelmakers, in keeping with the global trend of consolidation," said Xu Bin, who owns shares of Baosteel's publicly traded Baoshan Iron & Steel Co unit among 3 billion yuan (US$375 million) of assets he manages at Dacheng Fund Management Co in Shenzhen. "The costs of mergers have fallen in China so it's an opportune time for large companies" such as Baosteel "to take the lead in combining with smaller companies," he said.
China had the capacity to produce 470 million tons of steel in 2005, with capacity for another 150 million tons being built or planned, according to a June 30 estimate by the National Development and Reform Commission. China plans to shut small polluting steel mills and force the industry to merge, aiming to form three large steel-making groups by 2010, each with capacity of more than 30 million tons a year.
Baosteel's public relations manager Meng Haibiao said he's unaware of any plans to merge with Chongqing Steel. Baoshan's investment relations manager Yu Hong said she's unaware of Interfax's report.
|
|
