Shandong Iron and Steel Group
Encyclopedia
Shandong Iron and Steel Group Co Ltd commonly known as Shandong Steel, based in Jinan
Jinan
Jinan is the capital of Shandong province in Eastern China. The area of present-day Jinan has played an important role in the history of the region from the earliest beginnings of civilisation and has evolved into a major national administrative, economic, and transportation hub...

). In 2009, it took a 67% stake in Rizhao Iron and Steel. SISG is controlled by the provincial government of Shandong
Shandong
' is a Province located on the eastern coast of the People's Republic of China. Shandong has played a major role in Chinese history from the beginning of Chinese civilization along the lower reaches of the Yellow River and served as a pivotal cultural and religious site for Taoism, Chinese...

. SISG was formed in March 2008 when the provincial government of Shandong
Shandong
' is a Province located on the eastern coast of the People's Republic of China. Shandong has played a major role in Chinese history from the beginning of Chinese civilization along the lower reaches of the Yellow River and served as a pivotal cultural and religious site for Taoism, Chinese...

 merged two state-owned steel producers.

History

The State-owned Shandong Iron and Steel Group Co Ltd was created out of the restructuring of Jinan Iron and Steel Group Co and Laiwu Steel Group Corp -- the sixth- and seventh-largest steel makers in the country -- and Shandong Metallurgical Industry Corp. The three belong to the Shandong provincial state assets management commission.

Shandong Iron and Steel has a registered capital of 10 billion yuan ($1.4 billion) and is fully state-owned.

Under the provincial steel industry plan, the group has an annual output of 31.6 million tons. In 2007, Jinan produced 12.12 million tons of crude steel and Laiwu turned out 11.7 million tons.

In 2005, Anshan Iron and Steel Group
Anshan Iron and Steel Group
Anshan Iron and Steel Group is the second-largest steel maker in Mainland China by output, focuses on producing high-end products such as electroplating, color-coated, and silicon flat steel products to make car bodies and computer and telecommunications equipment...

 took over the smaller Benxi Iron and Steel Group and formed the Anben Iron and Steel Group. Both companies, which ranked in the top 10 at the time, were based in the northeastern province of Liaoning.

Luo Bingsheng, vice chairman of the China Iron and Steel Association
China Iron and Steel Association
China Iron and Steel Association is a national, non-profit organization founded in 1999 on the basis of China Metallurgical Enterprise Management Association. CISA members consist of China’s steel enterprises, institutions, societies and individuals in the iron and steel industry, which...

, said that link-ups and restructuring of the steel industry had become a global trend and the new Shandong-based steel group would play an active role in the international competitiveness of the country's steel industry.

Jinan

Jinan Iron & Steel Company Ltd. was a company principally engaged in smelting, processing and sale of steel products. Jinan Iron & Steel provided steel products, including hot rolled ribbed steel bars, hull structure steel plates, thick steel plates, wide and heavy steel plates, deformed steel bars, steel profiles, steel billets, cold and hot rolled steel products, as well as coking products, among others. Jinan Iron & Steel was also involved in sale of dangerous chemical goods, distribution of coal gas, steel smelting technology consulting services, as well as marketing of iron ores and other ores.

Laiwu

Laiwu Steel Corporation was principally engaged in the manufacture and sale of pig iron, steel billets, steel ingots, steel products, coke and granulating slag and the supply of electricity and heat. During the year of 2008, Laiwu Steel Corp produced approximately 4.69 million metric tons of pig iron, 5.13 million metric tons of steel and 6.29 million metric tons of steel products. Laiwu Steel Corp distributed its products domestically and to overseas markets with eastern China as its major market. As of December 31, 2008, Laiwu Steel Corp had eight major subsidiaries and three associates.

Rizhao merger

According to China Securities Journal
China Securities Journal
The China Securities Journal is a national securities newspaper, sponsored by Xinhua News Agency. It is based in Beijing, and has two offices in Shanghai and Shenzhen...

, SISG signed an agreement to take a 67% stake in Rizhao Iron and Steel. On September 6 2009, Shandong Iron and Steel Group Co., Ltd. and Rizhao Steel Holding Group Co., Ltd. signed agreement on asset restructuring and cooperation, which marked the former's success in the reorganization. According to the agreement, both sides jointly reorganized the assets to the JV by means of a capital injection. SISG owns 67% stakes by cash, and Rizhao Steel holds 33% stock with net assets. Additionally, the agreement made clear the restructuring principles, means, the scope of assets, the evaluation of restructuring assets, the work processes, as well as staff placement. After signing the agreement, both sides will immediately start all evaluation works. The determined agreement between Shandong Steel and Rizhao Steel indicated both sides made substantial progress in asset reorganization and cooperation, as well as the strategy of Shandong's industry shift from the inland to coastal cities. Rizhao is founded and controlled by billionaire Du Shuanghua.

The consolidation is part of a plan by the Shandong provincial government to streamline its steel sector, one of the country's largest and most fragmented. Rizhao and Shandong Iron and Steel had previously signed a letter of intent for consolidation in early November but the deal was abandoned in January after Kai Yuan Holdings Ltd, a property investment and heat energy supply company, bought about 30 percent of the core assets in Rizhao.

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