SHANGHAI, China (AP) -- Tangshan Iron & Steel and rival Handan Iron & Steel have begun talks to combine operations in a deal that would create one of China's biggest steelmakers, Handan said Thursday.
The two state-owned companies, both based in the province that encircles Beijing, would be renamed the Hebei Iron & Steel Group, Handan's publicly traded unit said in a notice to the Shanghai Stock Exchange.
No financial details were released.
Top executives of both group companies are leading working groups to prepare for a tie-up, it said.
The official Xinhua News Agency, citing senior Hebei officials, said Hebei Iron & Steel would be inaugurated by July.
Hebei Steel would have an annual output capacity of 31.75 million metric tons of iron and steel, exceeding the annual output of industry leader Baosteel Group, which has a capacity is about 30 million tons, it said.
U.S. Steel Corp. has an annual capacity of 31.7 million net tons of steel, including a 7.4 million tons of capacity in Central Europe.
The government has been orchestrating an industry consolidation aimed at nurturing a corps of internationally competitive steel manufacturers. Xinhua said the merger was also aimed at preventing takeovers of the two provincial steelmakers by outside groups such as Baosteel and Beijing's Shougang Group.
Tangshan Iron & Steel Group produced 22.75 million tons of steel last year, while Handan Iron & Steel had an output of 9 million tons.
Handan Iron & Steel Group mainly produces steel billets, steel products, sintering products and coke.