Jinan Steel and Laiwu Steel, both subsidiaries of the Shandong Iron and Steel Group (SDIS), announced on Wednesday the two companies have exchanged presidents,

Chen Qixiang and Chen Xiangyang, which should help communication
between the two and improve their knowledge each other’s businesses to
prepare for the restructuring of the SDIS.

On Tuesday, the group, located in eastern China’s Shandong province,
announced the establishment of a purchase center, sales center, capital
center and an operations coordination center, and the appointment of
senior management for the four centers.

Earlier, on September 6 this year, the Shandong Iron and Steel Group
signed agreement to acquire 67 percent stake in the Rizhao Iron and
Steel Group, which is headquartered in the port city of Rizhao,
southeast of Shandong province.

All these changes signal that the restructuring of the SDIS has stepped up a gear.

The restructuring of steel plants in Shandong province has taken a
considerable time. As early as in August of 2006, Jinan Steel and Laiwu
Steel both made public that Shandong province was moving towards the
merger of Jinan Steel and Laiwu Steel by founding the Shandong Iron and
Steel Group, which nevertheless was not officially established until
March of 2008. After the establishment of the group, however, the SDIS
had a real breakthrough when it acquired Rizhao Steel in early
September of 2009.

Zou Zhongchen, president of the SDIS, said the establishment of the
four new operational centers is a key step in the restructuring of SDIS
in terms of real operations. According to him, the integration of the
core business and key resources is a necessary step on the path to
overall unity of the SDIS.

“We expect to test run the four centers at the end of 2009 and put them into official operation in 2010,” said Zou.

Jinan Steel and Laiwu Steel have both suspended trading on Shanghai
bourse since November 9, explaining that their parent company, the
SDIS, is working on assets restructuring of the two listed companies.

Market watchers hold that the restructuring of the SDIS may follow the
path of the Heibei Iron and Steel Group Corporation (HBIS).

HBIS completed its restructuring in late September this year. Its
subsidiary, Tangshan Steel, acquired the other two listed subsidiaries
of HBIS, Handan Steel and Chengde Vanadium and Titanium, through a
shares swap, after which Tangshan Steel became the only listed
subsidiary of HBIS.

Market watchers expect the three listed subsidiaries of the SDIS will
be combined into one listed company, in a similar fashion to HBIS. And
Jinan Steel is taken as the one to play the role of Tangshan Steel.

The group made net profit of 987 million yuan in the first nine months
of this year, even though it lost 1.3 billion yuan in the first half
year. Its performance will be greatly improved with the controlling
stake in Rizhao Steel, which made net profit of 2.78 billion yuan and
turned in tax of 3.1 billion yuan in the first nine months of this year.

The integration of Rizhao Steel into the SDIS is part of the overall
development of the steel industry of Shandong province, which is in
line with the whole country’s steel industry development plan.

Source: Chinamining

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