The merger of Chinese metallurgical enterprises continues

Delong Group, a private Chinese steelmaker with steel mills in Tangshan, Hebei and Tianjin provinces in northern China, will merge its steel mills in Tangshan with another local privately-owned wire rod manufacturer, Qian'an Jiujiang Wire Rod Co (Jiujiang). Wire) to help "further integrate the Tangshan steel industry," according to the company’s August 4 reports.

The two steel companies held an official meeting on July 31 to mark that Jiujiang Wire has acquired a majority stake in Tangshan Delong Iron & Steel Co (Tangshan Delong), a Delong steel mill in Tangshan, Jiujiang Wire reported via its official WeChat account on August 4.

Officials at Tangshan Delong could not be reached for comment on August 4, and officials at Jiujiang Wire declined to share more details on the matter.

Delong Group commented in a WeChat message on August 3 that Tangshan Delong and Jiujiang Wire "form a mutually beneficial cooperation ... in the production and sale of wire rod and welded pipe", and the merger will "facilitate both sides" to engage in further integration of Tangshan steel assets and build a solid foundations for increasing the market position and competitiveness of companies ”.

Tangshan Delong is capable of producing 559,100 tonnes /year of welded pipes, representing 15% of the domestic market share, and Jiujiang Wire is the largest wire rod production base in Asia with a production capacity of about 10 million tonnes /year, Delong said.

A source in Tangshan close to Delong Group said Delong's divestiture of the Tangshan subsidiary with Jiujiang Wire may be due to the need to raise capital for investment in the Simandou iron ore mine in Guinea, West Africa, which should “respond to Beijing's call for greater self-sufficiency in steelmaking raw materials ”.

Ding Liguo, chairman of Delong Group, said at a recent China Iron & Steel Association (CISA) event on July 28 that he "may be involved in the development of the Shimandou iron ore project," according to China Metallurgical News, an official CISA publication.

The DeLong-Jiujiang deal is part of an ongoing M&A in China among Chinese steel mills, as it is widely recognized that the country has sought to increase concentration in the sector through its top 10 steel mills to provide 60% of the country's total production. smelting steel by 2025 - a jump from 39% in 2020.

Delong was incorporated in 2000 in Xingtai, Hebei Province with a 3 Mtpa hot rolling capacity, but by the end of 2020 it boasted 35 Mtpa steel production after absorbing 28 Mtpa by Bohai Steel Group (Bohai) in Tianjin in 2019 and crude steel production was 28.3 million tonnes, the eighth largest steel producer in China, according to the World Steel Association and Delong Group.

Delong also currently operates a 1.5 Mtpa steel plant operated by PT. Dexin Steel Indonesia in Sulawesi in Indonesia.