Russian steel producer
Severstal is at an essential stage of negotiations to acquire a minority stake in
China's Tonghua Iron and Steel Group.
China's Jilin province based Tonghua Iron and Steel Group Co. is one of the largest steelmakers in northeast
China, with 3.2 million mt annual steel
production capacity. It is a major
longs and hot rolled
flats producer in North
China.
Both
Severstal and Tonghua Steel confirmed that they have not completed the negotiations on the possibilities of the takeover yet. SteelOrbis learnt that one of the obstacles to
Severstal purchase of Tonghua Steel shares is the shareholding mechanism of the company. Jianlong Steel has become the largest shareholder of Tonghua Steel last year. Therefore, the government may not approve
Severstal's stake acquisition.
Severstal commented that the company's plan to acquire shares of Tonghua Steel is in line with
Severstal's strategic goals of global consolidation. According to the company officials,
Severstal has a number of steel industry projects to invest in various parts of the world. The company's acquisition of 62 percent of the shares of Italian Lucchini, SeverCorr investment and the acquisition of Rouge Industries in the U.S are just some of the examples to company's expansion policy.