Merger of Wuhan Steel and Liuzhou Steel
SteelOrbis Shanghai On Monday, December 19, Wuhan Iron and Steel Group Company signed a contract with Nanning local government in Guangxi Zhuang Autonomous Region, agreeing to establish Wuhan-Liuzhou Steel Company with a joint capital of RMB 12.7 billion ($1.58 billion). Liuzhou Iron and Steel Group, largest industrial enterprise in Guangxi, injects a capital of RMB 6.25 billion ($780 million), while Wuhan Steel invests in RMB 6.506 billion ($810 million). Sources report that this is the first strategic merger of two companies that locate in different provinces after the release of new steel industry policy this past July. The aim of this move is to get approval for the ten-million-metric ton Fang Chenggang Iron and Steel Base project in Guangxi. The planned investment for this world class modern iron and steel enterprise project is RMB 60-70 billion. At present, this project is now in the evaluation stage. After the completion of the project, Wuhan Steel is likely to have 30-million-metric ton production capacity per annum from 10-million-metric ton, ranking itself third in China. From the layout of China's iron and steel industry, Baosteel focuses on East China markets, Angang-Benxi Steel focuses on northeastern and northern China markets, Wuhan Steel focus on middle-southern markets. This move of merger has an active role in implementing the strategy of developing middle and western China.