SteelOrbis Shanghai
On June 24, Baosteel Group announced that it is now discussing with Guangdong Provincial State-owned Assets Supervision and Administration Commission as well as with Guangzhou Municipal State-owned Assets Supervision and Administration Commission as regards the formation of a joint venture, Guangdong Iron & Steel Group, with two other parties.
With a capital of RMB 35.86 billion ($5.2 billion), Guangdong Iron & Steel Group will be registered in Guangzhou. Baosteel will hold 80 percent of the new company with a contribution of RMB 28.688 billion ($4.2 billion) in cash. Guangdong Provincial State-owned Assets Supervision and Administration Commission as well as Guangzhou Municipal State-owned Assets Supervision and Administration Commission will ask Guangzhou Steel and Shaoguan Steel to assume a combined 20 percent stake with existing assets totaling RMB 7.172 billion ($1 billion).
The establishment of Guangdong Steel Group signifies the appearance of the third provincial-level steel group after Hebei Steel Group and Shandong Steel Group. It may be expected that in the near future this kind of steel group will also come into being in other provinces. Moreover, restricted by regional economic benefits and some other factors, large-scale steel groups such as Baosteel and WISCO have already met with difficulties in their takeover and acquisition bids for other steel companies in China.