Posted on 04 Jun 2019
China’s biggest steel producer is set to gobble up a smaller rival in the latest move to consolidate the bloated industry.
State-owned China Baowu Iron and Steel Group will take a 51% stake in Magang (Group) Holding Co. Ltd., according to an announcement from Magang’s listed unit on the Shanghai Stock Exchange yesterday.
The move will bump up Baowu’s total production capacity from 70 million tons to 90 million tons, bringing it closer to the 113 million-ton total capacity of Arcelor Mittal S.A., the world’s largest steel maker.
The merger is part of the government’s five-year plan to consolidate the steel industry and put 60% of capacity in the hands of the country’s largest steel makers by the end of the decade.
It still has a long way to go, with the top 10 controlling just 48.8% of capacity by the end of the first half of 2018, according to data from the China Iron & Steel Association.
