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Hebei Steel eyes more acquisitions

(Agencies)
Updated: 2010-03-12 11:07

Hebei Iron & Steel Group is planning more mergers and acquisitions in China and abroad as part of a government drive to improve the country's mills.

"We want to make further progress on mergers and acquisitions," Chairman Wang Yifang said at a press conference in Beijing Thursday, without identifying targets.

The state-owned company is in talks to buy Shijiazhuang Iron & Steel Co, Wang said March 7.

The Chinese government wants to accelerate consolidation in the steel industry to tackle overcapacity and curb pollution as output soared to a record last year. The overcapacity is depressing prices and hurting profitability, the China Iron & Steel Association said.

"In Hebei, two-thirds of the production comes from privately owned mills," Wang said. "In times of favorable market conditions, they are unwilling to be merged." Hebei Steel is in contact with producers outside of its province for possible deals, he said.

The Chinese government is planning to close blast furnaces with capacity below 300 cubic meters by the end of 2010 and furnaces with capacity less than 400 cubic meters next year, Wang said.

Hebei Steel was formed in June 2008 from the combination of Tangshan Iron & Steel Group and Handan Iron & Steel Group, both of which are based in the northern Hebei province.