Baosteel has disclosed its intention to enter into an alliance with China's largest private steelmaker Shagang Steel. Although this disclosure has not yet been confirmed by Shagang Steel, the indications from Baosteel are that moves towards a merger have commenced.
Based in Zhangjiagang city in Jiangsu Province on the east China coast, Shagang Steel was founded in 1975. Helped by its favorable geographical position, the company has seen rapid growth in recent years. In 2006 the annual steel production capacity of the mill reached 14.63 million metric tons. Shagang mainly produces hot rolled sheet, high speed wire rod and debar; accounting for 35 percent of the domestic wire rod market and 10 percent of the domestic debar market.
It is also reported that the world famous investment banking company Goldman Sachs has expressed an interest in obtaining 10 percent of Shagang Steel's shares at a price of RMB 6.6 billion ($875 million). This price is equal to three times Shagang Steel's net asset value.