Baowu breaks 100m t/y barrier with Tisco acquisition

China Baowu group will become the controlling shareholder of Taiyuan Iron & Steel (Tisco), as well as the actual controller of Tisco Stainless. This will make Baowu Group the world’s first 100 million tonnes/year crude steelmaker, Kallanish notes.

On 21 August, Shanxi State-owned Assets Supervision and Administration Commission, Tisco’s 100% shareholder, signed an agreement with Baowu to transfer a 51% stake in Tisco to Baowu for free.

After the completion of this transfer, Baowu will indirectly control 62.7% of Tisco Stainless shares through Tisco, which means Baowu will achieve effective control of Tisco Stainless. The ultimate controller of the three companies will be the State-owned Assets Supervision and Administration Commission of the State Council (SASAC).

According to the World Steel Association, Baowu’s and Tisco’s crude steel output were 95.47 million tonnes and 10.86mt respectively in 2019. After this reorganisation, Baowu will surpass ArcelorMittal’s 97.31mt crude steel output in 2019 to officially become the world’s top steel enterprise. Baowu Group and Tisco combined accounted for 10.67% of China’s steel output in 2019.

According to targets from the Ministry of Industry and Information Technology, national crude steel output must be controlled under 1 billion tonnes/year. The output of the top ten steel companies should account for no less than 60% of national output. Baowu would account for almost one fifth of production of the top ten steelmakers, assuming no further expansions.

In terms of stainless steel, the capacity of Baowu and Tisco Stainless, plus Baosteel Desheng’s capacity to be commissioned next year, will be more than 10m t/y. Baowu and Tsingshan will become the only two steelmakers with an annual stainless output of more than 10mt. The industrial concentration of stainless steel is expected to increase, since the top three companies’ output will account for 60% of overall stainless production in the future.

Baowu also became the largest shareholder of Tibet Mining Corporation two months ago. The company’s main products are chromite, copper and lithium ore, and chromite is an important raw material for stainless steel.