Following the establishment of Hebei Steel Group, Baosteel has found it difficult to go through its original strategy in Hebei Province. As disclosed by the vice-president of Hebei Steel Group Liu Ru Jun 0n March 9, Baosteel is prepared to withdraw from Hanbao Steel in which it owns a 50-percent stake, and Hebei Steel Group will take over the stake in question once Baosteel withdraws and will hold 100 percent of Hanbao Steel. However, this issue hasn't been finalized yet, and both parties are still in discussion.
According to the top level officials of Baosteel, since there were no such conditions and premises for investment when Handan Steel merged into Hebei Steel Group, Baosteel began to consider withdrawing from Hanbao Steel. The reason why Baosteel established a joint venture with Handan Steel was that Baosteel once hoped to take advantage of this shortcut to explore the market in Hebei Province. While discussing with Handan Steel about the joint venture, Baosteel used to struggle for majority stake, but finally failed and had to make concession at 50-percent stake. At that time, Baosteel still kept hope that it may increase its share in the future; however, all hope was abandoned against the establishment of Hebei Steel Group in June 2008.
On May 10 2007, Baosteel and Handan Steel inked to found a 50-50 joint venture. With the total investment of RMB 19.368 billion ($2.84 billion), the new plant was set to have a capacity of 4.6 million mt of high-quality steel.