Shougang Group, one of the mainland's top 10 steelmakers, plans to invest 19 billion yuan (HK$21.55 billion) to expand production capacity at a newly acquired steel mill in Shanxi province.
Beijing-based Shougang has agreed to pay 500 million yuan for a 90 per cent stake in Changzhi Iron & Steel (Group) under an agreement it signed with the Changzhi municipal government on Saturday.
The local government will retain a 10 per cent stake in the steel mill, according to a statement posted on the website of Changzhi Steel.
Shougang would spend 19 billion yuan in the next three years to more than double Changzhi Steel's annual capacity to six million tonnes and improve its product mix, the firm said.
The co-operation between the two mills is the second cross-province merger and acquisition deal since the State Council unveiled a revitalisation plan for the industry early this year. Shanghai's Baosteel Group bought a 56.15 per cent stake in Zhejiang's Ningbo Iron & Steel in March for 2.02 billion yuan.
Analysts expect Shougang to also buy coal and iron mines in Shanxi to optimise its local industrial chain.
