Chinese steelmaker Shangang Group plans to acquire local private sector steelmaker Nanjinzhao Group. Both companies are based in the eastern Chinese province of Shandong. Nanjinzhao Group owns a large number of iron ore resources in China and also overseas, which would boost the self-sufficiency in iron ore supplies of Shangang Group.
An insider at Shangang Group has revealed that negotiations between Shangang Group and Nanjinzhao have been continuing for more than two months now, though a final agreement has not been reached yet.
Nanjinzhao Group's main business interests are in steel, mineral resources, coke, and other areas. In 2009 its sales revenues amounted to RMB 18.829 billion, ranking 289th among the top 500 enterprises in China. Although the total assets of Nanjinzhao Group are smaller than those of Shangang Group, it has more iron ore resources than Shangang Group.
Shangang Group's iron ore supplies from its own resources originate from its subsidiaries including Jinling Iron Mine, Laiwu Minerals and Lunan Minerals. In 2008 Shangang Group's volume iron ore concentrate from its own resources amounted to 2.952 million mt, with the volume reaching 2.245 million mt in January-September 2009.
By 2020, Shangang Group plans to boost iron ore supplies from its own resources to around 15 million mt, which would be equal to 30 percent of total iron ore supplies to the group.