The agency which oversees big state companies said on Tuesday Beijing had been attempting to increase its companies’ international competitiveness by forcing mergers, including the high-profile $26bn (K77bn) union of its two railway construction groups a year ago.
No value was given for the Minmetals-MCC tie-up in the terse statement by Assets Supervision and Administration Commission.
Minmetals, originally a metals trading company which helped China survive a US trade embargo in the 1950s, has become one of the country’s strongest mining groups with extensive holdings overseas, including the Las Bambas copper mine in Peru.
MCC by contrast has encountered a series of misadventures in its overseas projects, ranging from the Ramu nickel mine in Papua New Guinea to its role in the A$8bn (K23.8bn) cost overrun at Citic’s Sino-Iron mine in Australia’s Pilbara region. The merger takes place against a backdrop of falling commodity prices that have hit many Chinese metal groups hard.
Sinosteel, Minmetals’ main steel trading rival, technically defaulted on a bond in October.
Chinalco, another top Chinese metals producer struggling with poor margins, may have to absorb loss making aluminium smelters shed by China Power International in another Sasac-orchestrated merger. – Financial Times