30 Jul 2009 11:16

Stake in state-owned Nanchang Steel up for grabs

Shanghai. July 30. INTERFAX-CHINA - The Jiangxi provincial branch of the State-owned Assets Supervision and Administration Commission (Jiangxi SASAC) plans to sell its 57.9 percent stake in Nanchang Iron and Steel Co. Ltd. (Nanchang Steel) as part of the steel mill's restructure plan, Nanchang Steel's listed subsidiary Nanchang Changli Iron and Steel Co. Ltd. (Changli Steel) announced on July 28.

"The Jiangxi government is working on a plan to bolster the local steel industry. At present, there are three steel mills located in the province, namely Nanchang Steel, Xinyu Iron and Steel Group and Pingxiang Iron and Steel Group (Pingxiang Steel)," an official with the Jiangxi branch of the National development and Reform Commission, who asked to remain anonymous, told Interfax on July 30.

He declined to disclose further information about the Nanchang Steel stake sale or the government's plans.

There has been market speculation that Pingxiang Steel, a privately-run steel mill, may be interested in the stake acquisition. However, company representatives were unavailable for comment when reached by Interfax.

"It all depends on what the Jiangxi government has planned for its steel industry. Unlike Shandong or Hebei Province, which have large-sized steel mills, Jiangxi's crude steel production capacity is relatively small. Therefore, it is expected that the Jiangxi government may want to offload its steel assets to privately-owned Pingxiang Steel or to a large state-owned steel mill from another province to develop," an industry analyst, who asked to remain anonymous, said.

Currently, Jiangxi SASAC owns Nanchang Steel and Xinyu Iron and Steel Group.

Changli Steel suspended trading on the Shanghai Stock Exchange on July 21, pending an announcement.