Wuhan Iron Buys Kunming Iron

Wuhan Iron & Steel Corp, China's No 5 steel mill based on 2006 production, will buy the smaller competitor Kunming Iron & Steel Group, a much-needed move for the country's mammoth but fragmented steel sector.

The company, based in the central city of Wuhan, will announce a deal tomorrow to acquire Kunming, which is based in the southwestern city by the same name, Luo Bingsheng, vice-chairman of China Iron & Steel Association, said yesterday.

A press official from Wuhan, surnamed Bai, confirmed the deal. But he declined to confirm the timing and reveal how much Wuhan will pay.

Wuhan produced 13.8 million tons of crude steel last year. Kuming's 2006 production stood at 4.8 million tons, 23rd biggest in China.

The move came after Baoshan Iron & Steel Corp, China's top steelmaker, last month took control of Bayi Iron Steel Group in Xinjiang Uygur Autonomous Region in the northwest.

However, Luo said the pace of mergers in the steel sector remains too slow because so many steel mills in China are too small to compete globally.