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China's largest steel producer to become even larger and number one in the world in terms of production

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China Baowu Steel Group will take over China's largest stainless steel producer TISCO as part of the PRC government's capacity consolidation program.

China's largest steel producer to become even larger and number one in the world in terms of production

China's largest steelmaker, China Baowu Steel Group, has agreed to acquire a majority stake in another Chinese steel giant Taiyuan Iron & Steel Co Ltd (TISCO) to further consolidate the country's steelmaking capacity.

On Friday, the Baowu Group reached an agreement with Shanxi State Capital Operation Co Ltd to acquire a 51% stake in TISCO, according to a filing on the Shenzhen Stock Exchange filed by Shanxi Taigang Stainless Steel, a subsidiary of TISCO.

The 51% stake is valued at RMB 14.5 billion (over $ 2.10 billion) based on an audit of TISCO's net assets. Nevertheless, Baowu will not pay anything for it, since the merger is being carried out as part of the state program for the restructuring of the PRC's steel facilities.

China, the world's largest steelmaking country, is seeking to consolidate the steel industry to achieve orderly market competition and reduce emissions.

Since its inception through the merger of Baoshan Iron & Steel and Wuhan Iron & Steel in 2016, the Baowu Group has expanded with the acquisition of Maanshan Iron & Steel in 2019 and intends to take control of Chongqing Iron & Steel.

Taking a controlling stake in TISCO will help Baowu achieve its target of 100 million tonnes of steel per annum and "improve overall competitiveness in the stainless steel sector," Baowu said in a statement.

Thus, the Chinese company will become the largest steel producer on the planet, displacing ArcelorMittal from the first place in 2019.

TISCO, the second largest stainless steel producer in China after Tsingshan Holding, has an annual steel output of 12.9 million tonnes, including 4.5 million tonnes of stainless steel.

According to the Baowu Group, the restructuring plan is still awaiting approval by the state asset regulator and antitrust review.

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