Chinese steel producer Baowu Steel will acquire domestic rival Shandong Iron and Steel through its "strategically restructuring" to create a combined company that had 146mn t of crude steel output last year.
Baowu, the world's largest steel producer with 115mn t of output in 2020, will take over Shandong Steel through the province's government asset regulator Sasac, it said in a yesterday. Shandong Steel is China's seventh-largest steel producer with 31mn t of crude steel output in 2020.
Baowu did not provide a timeline or ownership details for the acquisition.
The merger will deepen China's supply side reforms and strengthen China's state-owned industries, Baowu said. It will also help it meet targets for carbon neutrality and become a global leader in the steel industry, it added. Baowu plans to reach peak carbon emissions by 2023 and reduce emissions by 30pc by 2035.
Baowu was formed with the merger of Baosteel and Wisco in 2016 that gave it a capacity of 59mn t/yr. Its 2019 acquisition of Maanshan Iron and Steel raised its capacity to 90mn t/yr.
Baowu completed its acquisition of the 10mn t/yr Kunming Iron and Steel and signalled its interest in Shandong Steel earlier this year.
Shandong Steel will increase Baowu's installed production capacity to 155mn t/yr.
The merger will also widen Baowu's lead over the world's second-largest steel producer, Luxembourg-based ArcelorMittal, which reduced its crude steel output by 20pc to 71.5mn t last year because of the impact of Covid-19.
Baowu Steel posted a 45.5bn yuan ($7bn) profit last year, while Shandong Steel recorded a Yn7.7bn profit.
