Anshan Steel Group to Restructure Panggang Vanadium & Titanium 17 Dec 2010 December 16, Anshan Iron & Steel Group Corp., China??s second-largest steelmaker, will swap its iron ore assets for steel assets with one of its listed units in a transaction worth RMB 9.9 billion to avoid competition between them.
According to a statement filed with Shenzhen Stock Exchange??Pangang Group Steel Vanadium & Titanium Co. Ltd (000629.SZ) will swap its steelmaking assets for three mining assets held by its controlling shareholder Anshan Steel Group.
The mining assets it will acquire Anshan include the Liaoning-based company??s 50% stake in the Karara iron ore project in Australia, an iron ore mine in the northeastern province of Liaoning and 35.9% percent of Australia-listed iron ore miner Gindalbie Metal Ltd (ASX:GBG).
The restructuring will help avoid competition between Panggang Vanadium & Titanium and its sister company Angang Steel Co. Ltd. (0347.HK 00898.SZ), as both of the companies have steelmaking business.
According to the company??s statement, steelmaking accounts for around 80% of Panggang Vanadium & Titanium??s revenue. That amount is expected to fall to 40% after the restructuring.
Angang Steel is the major listed carrier of Anshan Steel. Anshan Steel also controls a 58.26% stake in Panggang Vanadium & Titanium after the Chinese government in May granted approval for it to take over parent Panzhihua Iron & Steel Group Co. Ltd.
??I believe it??s a proper development direction for us. Indeed, steelmaking is our strength because of our relative small size. On the other hand, iron ore, vanadium and titanium resource development is our strength,?? a Panggang Vanadium & Titanium executive, who preferred to remain unnamed, told the 21st Century Business Herald.
Upon the completion of the deal, Panggang Vanadium & Titanium is expected to have annual iron ore production capacity of 9.9 million tons. That figure will rise to 25.1 million tons by the end of 2011 when the second phase of the Karara iron ore project starts production.
Panggang Vanadium & Titanium also controls 186.2 million tons of vanadium reserves and 618 million tons of titanium, accounting for 52% of China??s vanadium reserves and 95% of titanium reserves.
Anshan Steel Group said it wants to develop Panggang Vanadium & Titanium into a major iron ore and vanadium and titanium resource develop enterprises in south China with international competitiveness.
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