Baosteel to Purchase Stake in Shandong Steel Company

Baoshan Steel (Baosteel), China's largest steel producer, announced on Dec 8 that it has agreed to buy a 48.6% stake in the steel company from Shandong Steel Group for 10.7 billion yuan ($1.49 billion). The stake will belong to SD Steel Rizhao Co Ltd, based in the northern Chinese city of Rizhao, and will increase Baosteeland's presence in the northern Chinese market, Baosteel said in a statement to the Shanghai Stock Exchange.

Baosteel, a unit of China's Baowu Group, said it was awaiting approval from the country's resource management authority. The government of the northern province of Shandong supports Shandong Steel Group.

China Baowu Steel Group Corp., Ltd., commonly known as Baowu, is a state-owned iron and steel company headquartered in the Baosteel Tower in Pudong, Shanghai, China. The company was formed by Baosteel Group, absorbing its smaller state-owned peer, Wuhan Iron and Steel Corporation in 2016.

In 2015, Baowu was the second largest steel producer in the world measured by crude steel output, with an annual output of around 35 million tons (China's total steel production in 2015 was 803.8 million tons), and employed 130,401 employees as of the end of 2012, had annual revenues of around $21.5 billion, and produces a mix of products.