Chinese steelmaker Baowu Steel Group is likely to acquire a controlling stake in its peer Chongqing Iron and Steel. The deal will expand Baowu’s annual output to 100mn mt by 2021, from the present 80mn mt.
Chongquing’s controlling entity, Four Rivers Investment Management Co Ltd, signed a letter of intent with China Baowu for the transfer of the controlling stake. The deal is expected to close by June 2020. This acquisition is in line with Baowu’s plan to increase the group’s steel production capacity to 100mn mt.
In June 2019, the steel mill announced its plan to acquire Maanshan Iron and Steel Co (Magang). Maanshan had an annual steel capacity of 20mn mt in 2018.
Baowu Steel is the world’s second-biggest steel manufacturer. China aims to consolidate the country’s steel production in the hands of 10 major producers. Currently, top 10 steel producers hold 40pc of China’s steel capacity, which it wants to raise to 60pc.