Wuhan Iron & Steel Co said yesterday it plans to buy assets worth 8.16 billion yuan (US$1.1 billion) from its state-owned parent to expand and boost competitiveness.

 

The steel mill has agreed to buy steel-related assets including coke, industrial gas, scrap steel, power and railway from its parent, according to a statement it filed with the Shanghai Stock Exchange.

 

The assets are valued at about 8.16 billion yuan, or 37.4 percent of the listed company's net assets at the end of last year, the statement said, adding that the purchase price has yet to be decided.

 

"The company's command on those resources related to steel making will be enhanced, as will our competitiveness," Wuhan Steel said, adding that its production and operation costs will be cut.

 

Wuhan Steel, based in central China's Hubei Province, said the acquisition won't lead to a major restructuring of the company.

 

"The asset acquisition could reduce Wuhan Steel's connections with its parent, but it won't add much to the company's earnings," a Guodu Securities analyst said.

 

(Shanghai Daily November 14, 2007)