China’s HBIS to acquire Tata’s ASEAN steel assets

China’s Hebei Iron & Steel Group Co (HBIS), a leading steel producer in the Northern Hebei province, will be able to deepen its footprint in the overseas steel market via its latest agreement with India’s Tata Steel on January 28 to acquire a 70% stake in the latter’s steel assets in Southeast Asia, HBIS disclosed on the day of the sign-off.

The acquisition at a cost of $327 million will enable HBIS to hold a controlling 70% stake in a new joint venture between the two steel conglomerates to fully own Tata’s Singapore-based NatSteel Holdings Pte (NSH) and Tata’s 67.9% share in Tata Steel (Thailand) Public Co (TSTH), Tata disclosed the details in its separate release also on Monday.

The deal is subject to related regulatory approvals and is expected to complete in three-four months, according to Tata.

The steel assets involved in the deal total 3.7 million tonnes/year, Mysteel learnt.

HBIS’s latest exploration in the ASEAN region is because of the steel market potential in the region because of its booming economy yet lack of sufficient steel supply and at the same time Beijing’s ongoing Belt and Road Initiative plan, a HBIS official explained.

Singapore, Thailand and Vietnam are all among the 65 economies along China’s Belt and Road, Mysteel understands.

This has also illustrated HBIS’ determination in expanding into overseas market in general with the start of its 51% stake acquisition of Switzerland-headquartered Duferco International Trading in June 2015, and its acquisition of Duferco and its takeover of the 2.2 million t/y Zelezara Smederevo in Serbia in April 2016.

The Chinese mill, however, quietly started exploring the overseas ferrous assets as early as in 2013 when it acquired a 25% stake in the Kami ore project in Labrador trough, eastern Canada from the Canadian miner Alderon Iron Ore.

HBIS will also build an 8 million t/y steel mill in the Philippines with the local partner Steel Asia Manufacturing, as reported.

Overseas, HBIS was operating a total of 5 million t/y steel capacity, had invested $1.1 billion and employed 13,000, according to a company post in late December of 2018.

At the same time, HBIS, China’s second largest steel producer with 50 million t/y steel capacity after China Baowu Group, has been progressing with optimizing its locations of steel assets inside China, among which is the relocation of its 6 million t/y Xuanhua Steel to Laoting of Tangshan from Zhangjiakou city in Hebei, as Mysteel reported.

Tata Steel, founded in 1907 and headquartered in India, has operations in over 20 countries with a combined 28 million t/y steel capacity.

Written by Olivia Zhang, zhangwd@mysteel.com

Edited by Hongmei Li, li.hongmei@mysteel.com