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Takeover halted due to protests

By Hu Yinan (China Daily/Agencies)
Updated: 2009-08-17 07:44

Thousands of workers at a State-owned steel plant in Anyang, Henan province yesterday were still waiting for government promises to be delivered after a five-day protest against the takeover of their plant by a private firm.

Henan's vice Party chief Chen Quanguo and Deputy Governor Shi Jichun, who arrived at the trouble-plagued Linzhou Iron and Steel on Friday, promised earlier Saturday morning to suspend the takeover by Fengbao Iron & Steel Co Ltd and give each worker a monthly subsidy of 550 yuan ($80) until production resumes.

Fengbao management was unavailable for comment yesterday.

On July 24, almost a year after local authorities decided to privatize the firm, Linzhou Steel was sold to Fengbao for 258.9 million yuan, or about 64 million yuan less than the initial bid at auction, without the workers' consent.

Workers and their relatives had been pressing for a suspension of the takeover.

They also demanded higher compensation and the resolution of issues concerning unpaid wages during the restructuring.

After they reached a deal with provincial authorities, demonstrators released Dong Zhangyin, a deputy director of the local State-owned assets supervision and administration (SASAC), about 3 am on Saturday, when the protest ended.

Dong had been sent by Puyang city to oversee the takeover and was held hostage by workers during the protest.

But Linzhou Steel's Deputy General Manager Cai Xinjie said he had "never learned of the 550 yuan subsidy".

It was the second time in less than a month that protests by workers have stopped the privatization of a Chinese steel plant, as the country tries to overhaul the sprawling industry.

Last month, some workers assaulted and killed an executive who was managing the acquisition of State-owned Tonghua Steel in Jilin province in Northeast China.

A group responsible for the restructuring of Linzhou Iron and Steel was reorganized under the leadership of Sheng Guomin, deputy secretary of Puyang City CPC Committee.

Sheng said: "Our work for the time being will be to extensively solicit workers' opinions on restructuring and the future development path of Linzhou Iron and Steel."

Two overturned government cars inside the compound of Linzhou Steel Corporation in Anyang, Henan province on Saturday afternoon. The cars were flipped over by workers on Thursday night, the third day of protest, after local police cut off all phone signals around the factory. [China Daily]

Set up in 1969, Linzhou Steel has 5,122 workers and pensioners on the regular payroll and 2,995 workers on the job. The plant is in Anyang, but authorities in Puyang, which was formed from part of Anyang, administer its operations.

The company produces 400,000 tons of pig iron and 100,000 tons of cement a year, and has been China's only production base of low-titanium iron.

The workers insisted the July 24 bidding was "illegal", which would cause severe losses of State-owned assets.

But Cai, deputy general manager of Linzhou Steel, told China Daily the bidding was legal.

"The law says any item that nobody bids for can be sold at no more than 20 percent lower than the initial bid," he said.

But no relevant clause exists in China's auction law.

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