China's state-run Baosteel Group and Wuhan Iron and Steel on Monday announced the new company that will result from their merger, taking another step toward creating one of the world's largest steelmakers.
The newly named chairman of China Baowu Steel Group, Ma Guoqiang, was president of Baosteel's listed subsidiary Baoshan Iron & Steel until 2013. To prepare for the tie-up, he was transferred to Wuhan Iron and Steel, or Wisco, and later became chairman. Baosteel Group President Chen Derong will be appointed as the merged entity's president.
The Chinese government approved the creation of the new company Monday. After changing its name to China Baowu Steel Group, Baosteel will take on Wisco's assets and personnel. Baosteel's crude steel production ranked fifth in the world, while Wisco was 11th, according to 2015 figures from the World Steel Association. The merged company, based on these figures, will have the second-highest production volume in the world after Europe's ArcelorMittal.
Baosteel's net profit increased 170% on the year to roughly 5.6 billion yuan ($826 million) in the January-September period. Wisco recorded 370 million yuan in black ink, recovering from losses a year earlier.
Even as earnings improve, the new company faces the challenge of making more efficient use of facilities and its nearly 200,000 employees.
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