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Shougang to shuffle assets in listing move

Updated: 2007-02-13 08:44

Shougang Corp, China's No 9 steelmaker by 2006 production, will inject the assets of its new, planned plant into a Shenzhen-listed arm, to enable it to list in its entirety.

Zhu Jimin, the group's chairman, told China Daily that it will put the new plant, to be located in a small northern Chinese island, into Shenzhen-listedBeijingShougang Co Ltd "when construction reaches a certain stage".

A worker walks under huge pipes at the Shougang Iron and Steel Group plant in Beijing. [Reuters]

However, Zhu did not provide a specific timeframe.

The parent Shougang and Tangshan Iron & Steel Corp, the nation's third-biggest steel mill, will start building the new plant this month in Caofeidian, Bohai Bay, with a total investment of 66.8 billion yuan.

Shougang will hold a 51 percent stake in the plant, which is to be completed by 2010, with an annual production capacity of 9.7 million tons. The plant will make car and home appliance plates and other high valued-added products.

The expected asset injection is expected to enable Shougang to raise money to expand in a country that has been the world's top steel producer for a decade.

"The move will help Shougang strengthen its profit-making ability considerably as the new plant will be its best asset," said Zhou Xizeng, an analyst with CITIC Securities Co Ltd in Beijing.

A number of big State-owned steel mills have listed in their entirety in recent years, such as Baoshan Iron & Steel Corp (Baosteel), Wuhan Iron & Steel Corp and Anshan Iron & Steel Corp.

Shougang's Zhu said the company will merge smaller steel firms in China as part of efforts to double its annual production to 20 million tons by 2010.

But he also declined to reveal itsmergertargets.