It is reported that the largest steel company Pangang Vanadium & Titanium in Southwest China under the control of Anshan Iron and Steel Group Corporation H1 operation revenue finished at CNY 23.73 billion up by 14.08%Yoy while the net profits attributed to the listed company only registered at CNY 0.17 billion down by 70.48%YoY.
Pangang attributed its bad performance to the larger growth rate of fuel prices than steel prices as well as the national macro control by Chinese government which pushed up the financing cost and then dragged profits down.
During H1 this year, the majority of steel companies were with no exception like Pangang. Angang predicted that the net profits attributed to the listed company may post at CNY 0.22 billion down by 92%YoY. It is known to all that the steel enterprises ran with thin profits and even suffered a loss in recent years impacted by iron ore demand far exceeding supply and three world mining giants' monopoly. To cope with it, most steel enterprises sought expansion in non steel industries by transforming the business pattern.
On December 16 2011, Angang Group publicized a reorganization scheme-its steel assent holdings would be replaced by 100% stock shares of Anqian Mining Co ltd, Angang Group Hongkong Co Ltd and Angang Group Investment Pty Co Ltd. Then Pangang would turn out to a member of resource category focusing on mineral development and comprehensive utilization of Vanadium & Titanium from a large sized steel making enterprise concurrently producing Vanadium and Titanium.
After the asset replacement, the iron ore reserve may arrive at 4.2 billion tonnes with 1.81 billion tonnes recoverable reserve. The iron ore reserve may even reach 11.8 billion tonnes with the annual iron concentrate output at more than 50 million tonnes when iron ore assets is completely injected by Angang, thus Panggang would stand out to be the one of the largest iron ore enterprises in the world crowned as Chinese Vale.
Currently the reorganization scheme is waited for approval from China Securities Regulatory Commission.