Baosteel, Hansteel win approval to set up joint venture

Baosteel Group, parent company of Baoshan Iron & Steel Co. Ltd<600019>, and Hansteel Group, parent company of Handan Iron and Steel Co. Ltd<600001> got the approval from China Development and Reform Committee (CDRC) to establish a joint venture (JV) in Hebei Province.

According to the framework inked by the two companies on May 10, 2007, they will jointly invest RMB 19.4 billion to build a new firm, which will produce steel and iron 4.6 million ton per year. The registered capital of the JV will be RMB 12 billion and each partner will take 50% stake of the new company. Baosteel will invest RMB 6 billion and the remaining part will be capital and facilities from Hansteel.

The construction will start in March, 2008 and be accomplished in 2010. Boasted as the largest project in Hebei Province, the new firm will specialize in producing automobile steel, household electric appliance steel, and tube steel as well as alloy steel, cold formed steel roll and hot formed steel roll.

The cooperation with Hansteel is in the line of Baosteel's target to boost production and global growth, and the joint venture will facilitate the reform of Hansteel, according to analysts.