Shougang acquires 90% stake in Changzhi Iron & Steel

Aug. 11, 2009 (China Knowledge) - Shougang Group, China's leading steelmaker, has signed an agreement to acquire a 90% stake in Changzhi Iron & Steel for RMB 500 million, sources reported.

The remaining 10% will be held by the State-owned Assets Supervision and Administration Commission of the Changzhi municipal government. Changzhi Iron and Steel will change its name to Shougang Changzhi Iron & Steel Co Ltd after the acquisition.

Shougang will invest more than RMB 19 billion in the next three years to expand the mill's production capacity to 6 million tons by 2012 from the current 3.6 million tons.

The transaction will be a double win and will benefit the position of Shanxi's steel industry in China, said Zhu Jimin, chairman of Shougang Group.

The consolidation is in line with the State Council’s goals for adjusting and supporting the steel industry. Furthermore, the new company will become Changzhi's mainstay and contribute to the city's economy, said Guo Shiqiang, president of the mill.