Shougang Steel to acquire 77.59 percent stake in Tonghua Steel

Monday, 19 July 2010 13:55:07 (GMT+2)

Chinese steel producer Shougang Corporation is to acquire a controlling stake of 77.59 percent in Tonghua Steel (Tonggang), a Chinese steelmaker based in Jilin Province, from the State-Owned Assets Supervision and Administration Commission of Jilin Province, at a total estimated price of RMB 2.5 billion ($369 million).

The acquisition takes place within the framework of Shougang Steel's 12th five-year plan (2011-2015). Shougang Steel aims to double the turnover of Tonghua Steel by the end of the 12th five-year plan period by upgrading technology, adjusting production lines and via business diversification.

Tonghua Steel incurred losses both in 2008 and 2009. In 2009, the company posted a total loss of over RMB 1 billion ($148 million). Tonghua Steel is the biggest steel company in Jilin Province, with a current annual capacity of about 6 million mt of crude steel.

In 2009, Shougang produced 17.30 million mt of crude steel. The company is planning to raise its annual capacity to 30 million mt by the year 2012.

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