China's iron and steel giant Baosteel on Monday inked a strategic alliance deal with another domestic steel maker Baogang Group in Inner Mongolia, vowing to strengthen their cooperation and promote reorganization of their assets.
Under the framework deal, Baosteel will make use of its management expertise, technology and market to help optimize the product structure of the 10-million-ton capacity of Baotou Iron & Steel Group (Baogang) and raise the added value of the latter's products.
The deal says the two sides will further study the implementation plans for the model, procedure and timetable of their asset combination.
Baosteel and Baogang will also discuss the joint development of iron ore, thulium and coal resources in Inner Mongolia, according to the deal.
As the biggest iron and steel maker, Shanghai-based Baosteel Group Corporation had an output of 22.53 million tons in 2006. Baogang, based in Baotou city, Inner Mongolia, produced 7.48 million tons of steel last year.
"The cooperation is in line with our country's steel industry policy and is conducive to the structural adjustment of the industry," Baosteel Chairman Xu Lejiang said.
Baosteel Group will strive to realize a steel output of between 50 million and 80 million tons by 2010 through its development and strategic cooperation, according to Xu.
Baogang Group, whose output value was 27.3 billion yuan (US$ 3.59 billion) last year, will strive to realize an output value of US$ 10 billion in the next few years, Cui Chen, chairman of the group said.
(Xinhua News Agency July 24 2007)