Beijing Jianlong Group (Jianlong) is taking over the state-owned entity Xingtai Iron and Steel in a bid to increase its steel production capacity.
Through this acquisition, Jianlong is estimated to approach a total crude steel production capacity of 40mn mt per yera. Jianlong produced 36.5mn mt in 2020 and will integrate Hebei-based Xingtai’s 3mn mt capacity after installing a team to resume operations at the beleaguered plant.
According to media reports, the Jianlong management plans to achieve a production capacity of 50mn mt in 2021, indicating aggressive merger and acquisition plans throughout the year. The steelmaker also plans to increase its ore self-sufficiency through asset acquisitions.
Xingtai is a specialized steel wire rod producer. The company had accumulated CNY7bn ($1.1bn) in liabilities as of June 2020 due to a sharp decline in production and tighter environmental policies that require a revamp in technical operations.
Jianlong is China’s second-largest privately-held iron company and fifth among all domestic steel competitors. The firm achieved CNY195.6bn in revenue with a gross profit of CNY6.4bn in the first 11 months in 2020 against CNY140bn in revenue and CNY6.8bn in gross profit in the same period in 2019.
($1=CNY6.46)