Domestic

China's Laiwu Steel rejects merger with Jinan Steel

(Agencies)
Updated: 2011-01-04 15:51

Workers throw bags of waste materials from a rice mill into molten iron to maintain its temperature at a foundry of Laiwu Steel Group in Laiwu, Shandong province in this April 11, 2009. [Photo/Agencies]

The shareholders of China's Laiwu Steel have rejected a plan to merge with fellow mill Jinan Iron and Steel, a joint statement issued by the two companies said on Tuesday.

The merger, estimated to be worth about 11.3 billion yuan ($1.71 billion), required the consent of two thirds of the members of both companies' boards, but while Jinan Steel approved the proposals, Laiwu did not, the statement said.

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The proposals were first put forward early last year, but both companies said in August that "changes in the macroeconomic environment" as well as difficulties in the steel sector itself had forced plans to be delayed.

The two companies, based in the eastern coastal province of Shandong, already form part of the Shandong Iron and Steel Group, one of several new regional entities created to drive China's industry consolidation plans forward.

Total output of the group stood at 21.3 million tons in 2009, making it China's sixth-biggest steel producer.

China plans to put 60 percent of total output under the control of its top 10 mills by the end of 2015.

In the first 10 months of 2010, the top 10 produced 46.61 percent of the country's total crude steel output, figures from the China Iron and Steel Association showed.