| China maintains on steel mills control |
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| Wednesday,October 18,2006 Posted: 22:56 BJT(56 GMT) XINHUA NEWS AGENCY |
China will maintain strict bans on foreign control of large steel mills, Qi Xiangdong, vice secretary-general of the China Iron and Steel Association said.
Qi dismissed the possibility that the government might soften its stance, even after Xie Qihua, head of China's largest steel mill, suggested last week that a rule banning foreign firms from taking majority stakes in domestic mills could one day be revised.
"I think the national policy won't change," Qi Xiangdong said.
Xie, who also heads the iron and steel association, said last week that the ban on foreign control was "a good idea" but might be revised or updated as the Chinese economy develops.
In the short term, the rule has the greatest impact on Laiwu Steel Corp., which agreed to sell a 38 percent stake to European steel giant Arcelor earlier this year.
The deal, which has not yet been approved by the government, was struck before Mittal, the world's largest steel firm, agreed to buy Arcelor. If the government approves the Laiwu deal, Arcelor Mittal will own stakes in two of the top 10 domestic steel firms, each just short of a controlling share.
The Laiwu deal is still "making its way" through the approval process, said Dirk Matthys, Arcelor Mittal's Shanghai-based representative. He declined to say where exactly it is in the approval process.
"I imagine there's no hope," for the Laiwu stake sale, said Li Xinchuang, vice president of China Metallurgical Industry Planning and Research Institute, an architect of China's steel industry blueprint.
"A lot of people are against this deal. Why should we sell at a loss to ourselves?"
Baosteel Group, China's largest steel firm, that under Xie's stewardship has been one of the more aggressive about modernizing and taking over other firms, has been leading domestic mergers. Xie recently retired as head of the firm's listed arm but her term as group chairwoman runs through next year.
Baosteel will have an annual capacity of 30 million tons of steel once planned expansions are completed. It ultimately targets an annual capacity of 50 million tons, officials have said.
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