Baosteel to inject iron-making assets in listed unit
Updated: 2007-12-12 13:51
Baosteel will put 14.3 billion yuan ($1.94 billion) into iron-making assets in its listed unit, as part of an effort to improve efficiency and reduce pollution, the listed firm said on Tuesday.
The assets would be paid for from by a five-year interest-free loan from the parent to be repaid in equal annual instalments through the end of 2012, Baoshan Iron and Steel Co said in a statement to the Shanghai Stock Exchange.
The company also said it would issue convertible bonds not exceeding 10 billion yuan.
The main asset to be transferred is a Corex-C3000 iron works, recently completed by Siemens and the largest of four such facilities in the world.
The plant reduces iron using coal fines, not coking coal, thus removing the necessity of producing and using coke, which in return cuts emissions of sulphur dioxide and nitrogen oxides by more than 90 percent.
The plant will produce 1.5 million tonnes a year of pig iron, which will ultimately feed a heavy plate rolling mill, while also generating power.
The listed company controls almost all Baosteel's assets in Shanghai. New facilities and acquisitions of other steel mills are usually funded by the group before being transferred to the listed company in order to keep liabilities down and profits up.
China's largest steelmaker, Baosteel is spear-heading the government's efforts to modernise the industry. It is considering building a second, similarly sized Corex plant, but has not yet chosen its supplier, officials have said.
Baoshan's shares were suspended for one day on Tuesday, after weeks of speculation that China's largest steelmaker would involve itself in BHP Billiton's proposal to take over fellow Australian miner Rio Tinto .
Baosteel chairman Xu Lejiang last week denied Baosteel had the capability to make a counterbid for Rio, but rumours continue to circulate that China's sovereign wealth fund or its steel firms could trump BHP's offer.
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