Zhongnan Zhiwu Aims To Integrate China'S Green Steel Base With Zhongnan Zhiwu

The integration of Baowu in China continues.

On December 5, China Baowu iron and Steel Group Co., Ltd. (hereinafter referred to as "China Baowu") and Guangzhou municipal government signed a cooperation framework agreement on Zhongnan iron and steel. This also means that China Baowu will drive more business flow and capital flow into Guangzhou around the construction of upstream and downstream ecosystem of steel industry chain and supply chain. At the same time, Baowu group Zhongnan iron and Steel Co., Ltd. (hereinafter referred to as "Zhongnan iron and steel") was officially unveiled. China Baowu will take Zhongnan iron and steel as a platform to gradually promote the integration of relevant steel industries in Guangdong Province and the Central South region, and help the development of headquarters economy in Guangzhou.

"To transform Shaogang group into Zhongnan iron and Steel Group, the core appeal is to regard Zhongnan iron and steel as a brand platform for integrating central and southern China, including steel in Southwest China." On December 8, Xu Xiangchun, the Consulting Director of iron and steel network, said in an interview with the reporter of 21st century economic report that on the one hand, this kind of integration may be through the integration of assets and equity, on the other hand, it may also improve the industrial concentration through some collaborative cooperation, and play a role in stabilizing the market order.

As for the role of such a platform, Zhang Jingang, member of the Standing Committee of the Party committee and deputy general manager of China Baowu iron and Steel Group Co., Ltd., made it very clear in an interview with the media that "a demonstration production line of iron and steel manufacturing with green development in the whole country and the world will be built."

Mission of Zhongnan steel

Baowu group Zhongnan iron and steel group was originally named "Baowu Group Guangdong Shaoguan Iron and Steel Co., Ltd". Shaogang was once a key industrial enterprise in Shaoguan City and joined Baowu in 2011. On November 20, Shaogang Songshan (000717. SZ), a listed company platform of SISG, announced that the controlling shareholder "Baowu Group Guangdong Shaoguan Iron and Steel Co., Ltd." was officially renamed "Baowu group Zhongnan iron and Steel Co., Ltd." and its registered address was also changed from "10 neixiehe Road, Xicun Xicun Road, Liwan District, Guangzhou City" to "Room 302, No. 83 Pazhou Avenue, Haizhu District, Guangzhou City, Guangdong Province".

The overall layout of Baowu in Dawan District of China started. In an interview with the media, Zhang Jingang believed that the current iron and steel industry is in the stage of stock optimization, and in the long run, it should take the road of green development. The layout of network type short process environmental protection intelligent steel plant can reduce carbon emission to about 80%. Because of this, China Baowu's industrial layout in Guangdong will shift from long-term process to short-term process and take the green and low-carbon route.

The so-called process length refers to the iron and steel production process. The long process should have blast furnace, converter and steel rolling, while the short process has no blast furnace. It uses scrap steel to make steel and steel rolling from the beginning of electric furnace. But more importantly, in terms of energy consumption and environmental pollution emissions, the short process has obvious advantages over the long process. In terms of greenhouse gas, waste and particulate matter emissions, the short process is much lower than the long process, or even half as low.

Xu Xiangchun explained to the 21st century economic reporter: "with the stock adjustment, a prerequisite for the development of short-term process is the need for scrap. At present, the output value of domestic scrap steel is increasing, and the prerequisite for developing short-term process has been basically mature."

In Xu Xiangchun's view, another main reason is that if the carbon emission reaches its peak in 2030, steel, as a very important industrial sector of carbon emission, will also face great challenges. Through short process adjustment, carbon emission pressure of steel industry can be greatly reduced. Therefore, in the long run, it is inevitable for Guangdong to adjust from long process to short process.

In the signing of the contract, China Baowu holds 51% of the equity of Zhongnan iron and steel, and the remaining 49% of the equity is held by Guangwu holding group. After Guangwu holding group penetrates, the actual controller is the people's Government of Guangdong Province.

According to the information disclosed by the general office of Guangzhou Municipal People's government, as an operation platform for steel assets in central and southern China, Baowu group Zhongnan iron and Steel Group will implement centralized and unified management of capital, procurement, sales, research and development, investment and financing of its steel base, forming the aggregation effect of capital flow, trade flow, information flow, high-tech and high-end talents.

According to the official micro disclosure of Baowu, China's Baowu and Guangdong Province jointly promote the development of central and southern China, aiming to promote the professional integration, industrial development, platform operation, ecological coordination and diversified mixed transformation of Baowu iron and steel bases in Central South China region through the deepening cooperation between central enterprises and local governments, jointly promote the high-quality development of the iron and steel industry, and accelerate the formation of South China and southwest China With the new advantages and new pattern of "double cycle" mutual promotion in Southeast Asia, we will fully serve the construction of Guangdong, Hong Kong and Macao Bay area and Shenzhen's construction of the first demonstration area of socialism with Chinese characteristics, deepen the "1 + 1 + 9" work deployment for Guangdong Province, build a new regional development pattern of "one core, one belt and one area", and boost Guangzhou to realize the new vitality of the old city.

Chen Derong, Secretary of the Party committee and chairman of Baowu, said publicly that in the future, it would speed up the promotion of joint restructuring and form a "one headquarters, multi base" operation and control mode. The supply chain, industrial chain and value chain should be reconstructed to realize the high-quality development of iron and steel industry. In the future, it will form a super large steel flagship platform with assets of more than 200 billion yuan, annual sales revenue of more than 400 billion yuan, and profitability maintaining the advanced level of the industry, so as to boost the rapid development of regional economy.

Speed up integration

Before that, on November 30, Baowu group Zhongnan iron and steel group had already signed a cooperation framework agreement with Shaoguan Municipal People's Government of Guangdong Province. Both sides will accelerate the industrial transformation and upgrading and the rapid development of regional economy, and open up a new situation of win-win cooperation.

As an important listing platform of Zhongnan iron and Steel Co., Ltd. of Shaoguan Iron and Steel Group Co., Ltd., in the first half of 2020, it benefited from the overall market situation of the steel industry, and its performance is in the recovery space. In the first half of the year, the company's actual iron production was 3.26 million tons, with a year-on-year increase of 2.4%; 3.9 million tons of steel, with a year-on-year increase of 7%; 3.75 million tons of steel (including rolling billet), with a year-on-year increase of 8.6%; the first half of the year achieved a business income of 14.55 billion yuan, a year-on-year increase of 5.52%; the net profit attributable to the parent company was 823 million yuan, a year-on-year decrease of 18.26%; the non net profit was 808 million yuan, a. In the third quarter, the decline of net profit attributable to the parent company was still shrinking. The company's operating income in the first three quarters was 22.489 billion yuan, up 3.87% year-on-year; the net profit attributable to shareholders of listed companies was 1.212 billion yuan, a year-on-year decrease of 6.00%; the net profit attributable to shareholders of listed companies after deducting non recurring profit and loss was 1.201 billion yuan, with a year-on-year increase of 0.87%.

In the first three quarters of this year, China's steel market as a whole showed a "V-shaped" rebound situation, steel and black products prices rose. Wu Wenwen, founder and chairman of steel home website, had predicted that steel production and import volume in the fourth quarter would decline month on month, and steel demand would continue to improve; iron ore prices would fluctuate and fall back; domestic market capital supply would continue to maintain a relaxed situation. In the fourth quarter, the steel market will rise first and then fall.

In this context, the pace of integration of Baowu in China has accelerated significantly this year, and has launched the acquisition of Chongqing Iron and steel and Taiyuan Iron and steel. On September 4, Baowu of China signed a memorandum of understanding on cooperation with Xinxing International China. The two sides will jointly promote the structural optimization and transformation of iron and steel industry in Xinjiang Based on the principle of efficient coordination and common development, which is also regarded as the integration of China Baowu's iron and steel production capacity in Xinjiang.

Up to now, China Baowu has basically completed the integration of Chongqing Iron and steel. Chongqing Iron and steel (01053) announced on December 3 that the delivery conditions in the equity transfer agreement signed by siyuanhe Industrial Development Fund, China Baowu and Desheng group on September 16, 2020 have been fully met. Changshou iron and Steel Co., Ltd. completed the change of industrial and commercial registration on December 2, 2020. The shareholding ratio of China Baowu reached 40%, that of Desheng group reached 35%, and that of Zhanxin fund reached 25%. Baowu of China obtained the control right of Changshou iron and steel by reaching an agreement with Zhanxin fund, and became the actual controller of Chongqing Iron and steel.

Up to now, Baowu has actually controlled nine A-share listed companies, namely Baosteel, Baosteel packaging, Baosteel software, Songshan, Bayi Iron and steel, TISCO stainless steel, Masteel, Chongqing Iron and steel and Ruitai technology.

In Xu Xiangchun's view, Baowu's scale expansion is more realized through merger and reorganization, but the road of integration is far from complete. "At present, the layout of Baowu in coastal and inland areas has been basically determined. But scale expansion is not the ultimate goal, merger and reorganization is only the first step. In the future, it is more about how to carry out effective management after the expansion of the enterprise scale; how to improve the efficiency and make the enterprise culture get an effective integration, so as to achieve the efficiency and purpose of merger and reorganization, and really achieve 1 + 1 greater than 2? "