HIGH-GRADE NI-CU-PT-PD-ZN-CR-AU-V-TI DISCOVERIES IN THE "RING OF FIRE"

NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)

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Message: BAOWU Closer to World's Largest Steel Producer Title

One of our shareholders in China, Baowo Steel, is getting bigger and bigger.....Soon to overtake ArcelorMittal as the world's largest steel company.

 

https://www.spglobal.com/platts/en/market-insights/latest-news/metals/060319-chinas-baowu-closer-to-worlds-biggest-steel-producer-title-after-magang-merger

  • METALS
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  • 03 Jun 2019 | 04:58 UTC
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  • Singapore

China's Baowu closer to world's biggest steel producer title after Magang merger

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Singapore — The ongoing consolidation of China's steel industry has taken another step with the announced merger of state-owned Baowu Steel Group with eastern China's Maanshan Iron & Steel Group, or Magang, according to an announcement by Magang's Shanghai-listed arm on June 2.

 

The move could see the company become the world's largest steel producer within the next two to three years.

Anhui provincial state-owned Assets Supervision and Administration Commission of the State Council, or SASAC -- which manages the province's state-owned companies and which owns 100% of the Magang Group -- has agreed with central SASAC to transfer over 51% of the Magang group to Baowu. Anhui SASAC will retain the remaining 49% stake in Magang after the transfer.

Absorbing Magang will take Baowu's total crude steel capacity from around 70 million mt/year to 90 million mt/year, moving it closer to Luxembourg-based ArcelorMittal, currently the world's largest steel producer with nominal capacity of around 114 million mt/year.

 

 

In 2018, Baowu produced 67.43 million mt of crude steel, while Magang's output reached 19.64 million mt, giving a combined 87.07 million mt. ArcelorMittal produced 92.5 million mt last year and has been trimming output this year in response to weak demand in European markets.

Baowu is targeting 100 million mt/year of crude steel capacity by 2021. The company has not provided further details on its expansion plan, but the most likely route would be via mergers and acquisitions as China has banned any net capacity expansions.

Magang is located in Anhui province, some 300 km away from Baowu's Shanghai-based subsidiary Baosteel.

In a research note, Citigroup analysts said they expected Baosteel would be the "long-run [steel] industry consolidator" and believed "industry leaders in steel, cement, aluminum sectors [will] continue to grow through M&As."

Baowu was formed from the merger of Baosteel Group and Wuhan Iron & Steel Corp. in 2016.

Before the transfer of Magang shares to Baowu can be completed, it will need to be approved by China's securities regulatory commission and the Hong Kong Securities and Futures Commission, according to the announcement. Magang is listed in both Shanghai and Hong Kong.

Late last year, market reported of a potential tie-up between Baowu and Anshan Iron & Steel Group, which started after a former member of the standing committee of the Communist Party of Baowu was appointed general manager and deputy party secretary of Angang Group. The two parties denied they were in talks about merging at that time.

-- Analysis by Zhang Jing, newsdesk@spglobal.com

-- Edited by Norazlina Jumaat, newsdesk@spglobal.com

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