(Yicai Global) July 15 -- China Baowu Steel Group, the world’s largest steelmaker, is to add to its considerable industrial clout by taking over Shandong Iron & Steel Group, the tenth biggest steel mill in the world and China’s seventh biggest, giving it an output of nearly 150 million tons of crude steel a year.

“A planned restructuring may lead to changes in the controlling shareholder and actual controller of Shandong Iron & Steel,” the Jinan, northeastern Shandong province-based firm said yesterday. At present, the State-owned Assets Supervision and Administration Commission of Shandong Province holds a 70 percent stake.

Last year Shanghai-based Baowu produced 115.3 million tons of crude steel while Shandong Iron & Steel had an output of 31.1 million tons.

Thanks to strong steel prices in the first half, steel mill profitability has rebounded, analysts said. The inclusion of the steel sector in the carbon emissions trading scheme that started this month will lead to a further concentration of the industry, which will benefit sector leaders, they said.

Shandong Iron & Steel saw profit jump 20.6 percent last year to CNY5.6 billion (USD866.7 million) on revenue of CNY220.7 billion (USD34.2 billion). The group had total assets of CNY373.7 billion as of the end of 2020, with a debt-to-asset ratio of 82.8 percent. It has four listed subsidiaries, namely Shandong Iron and Steel, Shandong Jinling Mining, Zhongtai Securities and Luzheng Futures.

Baowu has acquired Magang Group Holding Iron and Steel Group, Taiyuan Iron & Steel Group, and Chongqing Iron & Steel Group in recent years.

Editor: Kim Taylor