The Shanghai-based Baosteel, China's largest steel maker, has invested 3 billion yuan in a 85 percent share of the largest steel maker in northwest China's Xinjiang Uygur Autonomous Region.
Baosteel signed the contract with Xinjiang Bayi Iron & Steel Co. Ltd on Tuesday in Urumqi.
"The unique geographical position of Xinjiang and its market ties with central Asian countries is a key reason for Baosteel to travel thousands of miles to cooperate with the company," said Xu Lejiang, CEO of Baosteel.
Baosteel is one of the most profitable steel enterprises in the world with an annual production capacity of over 20 million tons. It ranked 296th on the 2006 list of Fortune 500.
Xinjiang Bayi Iron & Steel Co. Ltd was built in 1951 and had an output of 2.84 million tons of steel in 2005.
In order to improve their status on the international stage, merger-and-acquisition strategies have become common among China's steel companies.
Tangshan Iron and Steel Company, located in the northern Hebei Province, rose to be China's second largest steel producer behind Baosteel by taking over two local steel companies, Xuanhua Steel and Chengde Steel.
The new company has also teamed up with the Shougang Group in Beijing to build a new production base in Caofeidian in Hebei Province with an annual output capacity of 15 million tons.
Baosteel also plans to set up a plant in south China's coastal Zhanjiang city with a production capacity of 10 million tons a year. It has also built strategic relations with two steel giants Magang Group and Taiyuan Iron&Steel Group.
"A lack of big enterprises has created a bottleneck in China's steel industry," said Luo Bingsheng, deputy director of China Iron &Steel Association.
China currently has over 6,600 steel producers. The steel output of the four largest steel makers in China only accounts for 18.5 percent of the total. The figure is 75 percent in Japan and 61 percent in the United States.
China plans to establish two to three steel conglomerates with an annual production of over 30 million tons each by 2010, according to the steel industry policy issued by the National Development and Reform Commission in 2005.
It also expects the top 10 domestic steel companies to control more than half of the country's total steel output by then.
Baosteel Appoints New Heads
Xu Lejiang has been appointed as the new chairman of the board of directors of Shanghai Baosteel Group Corporation, and Ai Baojun has been named as its new president, the company said Tuesday.
The appointment was made by the Central Committee of the Communist Party of China (CPC) and the State Council, the company said in a statement posted on its website.
The appointment was announced by Wang Dongming, deputy head of the Organization Department of the CPC Central Committee, at a meeting held in the company's headquarters in Shanghai on Monday, the statement said.
Xu, 48, joined Baosteel in 1982 and was appointed board director and vice president of the company in 1998. He has served as Baosteel's president since December 2004 and chairman of the board of directors for Baoshan Iron and Steel Co. Ltd., the listed unit of Baosteel, since May last year, according to the company's website.
Ai, 47, joined Baosteel in 1994 and worked as vice president and chief accountant for the company between 1998 and 2000. He served as board director of Baosteel from 1998 through 2005. He has been working as board director and president of Baoshan Iron and Steel Co. Ltd. since February 2000.
Xu replaced 64-year-old Xie Qihua, who stepped down due to her age, the statement said.
Xie joined Baosteel in 1978 and was appointed as president of the company in 1994. She has served as chairwoman of the board of directors for the company since 2003. Currently, Xie is president of the China Iron and Steel Association.
"Xie has made significant contributions to Baosteel and China's iron and steel industry with her decades of years of diligent work and rich experience in business management," Wang told Monday's meeting.
Known as the "Iron Lady" of the iron and steel industry at both home and abroad, Xie led Baosteel into the list of Fortune 500 companies for three years in a row from 2004 to 2006.
Baosteel is one of the biggest global steel conglomerates with an annual production capacity of 20 million tons. It ranked 296th on the 2006 list of Fortune 500 companies with sales revenue of 126.6 billion yuan (US$16.2 billion) and was top of a list of China's 500 largest manufacturers.
(Xinhua News Agency January 17, 2007)