Major steel SOE merger wins regulatory approval in China

BEIJING - Two of China's largest stee makers have received regulatory approval to merge by the end of this month — part of Beijing's plan to cut overcapacity and nurture bigger, more-competitive industry leaders.

The planned merger of China's second-largest steel maker, Shanghai-based Baosteel Group Corp., and smaller rival Wuhan Iron and Steel (Group) Corp. (WISCO), won approval for the deal in late August from the State-owned Assets Supervision and Administration Commission (SASAC), which overseas State-owned companies.

The plan has been submitted to the State Council, China's cabinet, for final review and approval, which is expected later this month, several sources close to the merger told Caixin. The merger will create an industry behemoth with annual capacity exceeding 60 million tons and over 700 billion yuan ($105 billion) in total assets.

The new company will replace Hebei Iron and Steel Group as China's largest steel maker and make Baosteel/Wuhan Iron the world's second-largest, ranking only behind Luxembourg-based ArcelorMittal.

Under intense international pressure to cut steel overcapacity, Baosteel and WISCO have announced their targets: Baosteel will cut 9.2 million tons of production capacity in three years, while WISCO will shrink 4.42 million tons of steel production and 3.19 million tons of iron production this year, laying off or resettling about 10,000 workers.  www.webershandwick.cn (ATI).