Shagang Group to participate in mixed ownership reform of Anyang Steel

2021-05-17

May 17, 2021 - Shagang Group (Shagang), China’s leading privately-owned steel producer, will participate in a mixed-ownership reform of state-owned Anyang Iron & Steel Group (Angang), a 10 million tonnes/year steelmaker in Central China's Henan province, according to a post of Angang’s listed arm on May 14. Jiangsu province-based Shagang will become Angang’s controlling shareholder.

Shagang’s takeover of Angang, if realized, will be the latest in a spate of M&A successes in China in recent years involving both state- and privately-owned companies, as the country continues efforts to enhance consolidation of its steel industry, market sources noted. In China , a private or a foreign-owned company help in the restructuring of a state-owned enterprise, that restructuring is referred to as mixed-ownership reform.

According to the May 14 announcement from Anyang Iron & Steel Group (Anyang Steel), Angang’s Shanghai-listed arm, Shagang and Angang signed a letter of intent on May 13 under which Shagang will conduct due diligence, an audit and evaluation before eventually deciding whether to participate in the latter’s reform. Consequently, the implementation and timeline of the case are still uncertain.

The total capacity of Shagang Group and Anyang Group would be over 50 million tons per year, making Shagang’s share in China’s market bigger. This plan is in line with the government’s program to increase bid steel mills’ concentration from 40 percent to 60-70 percent by 2025.