Chinese Hegang to increase its stake in Duferco

Author: Paul Ploumis
17 Sep 2014 Last updated at 01:50:17 GMT
BEIJING (Scrap Monster): The Chinese Hebei Iron and Steel (Hegang) Group is said to be in talks with Swiss-based trading group Duferco to increase its stake in the world's largest steel trader to nearly 51-52%. According to Peng Zhaofeng, General Manager, Hegang, the talks are in advanced stage and the announcement to this effect is expected soon. The deal is worth around $400 million.

The Chinese steelmaker is presently the largest supplier of flat steel to Duferco. Hegang's subsidiary, Tangshan Iron and Steel owned 10% stake in Duferco in March last year in a deal worth $78 million. Industry sources in China believe that the agreement would be signed soon. However, European sources stated that all news coming out about the deal may not be 100% accurate.

Currently, Duferco sells steel products from Tangshan Iron and Steel in main markets including Asia, Middle East, Africa and South America. During 2013, almost 80% of the exported steel by the Hegang subsidiary were sold by Duferco. The company aims to boost its exports in 2014.

Hebei's decision to diversify its operation outside mainland follows strict imposition of environmental policies which had forced the steel firm to shutter some mills in the province. The high production costs at Chinese mills have also prompted Hebei Iron and Steel Group to stretch out its operations into other parts of the world.