A bid by Wuhan Steel to buy Chongqing Steel has been rejected.

Wuhan Steel intended to make inroads into the Southwest China region but the Chongqing Municipality Government did not agree to the deal.

Chongqing Steel owns several iron ore mines, which make it more profitable than other steelworks in the area, so both the steelworks and the municipality government were reluctant to sell the business.

Chongqing Steel is now in the process of relocation and expansion. According to the municipal government’s plan, the steelworks will be relocated to a site far from the city, and will be expanded from its current 6Mt/y to more than 10Mt/y in 2012.

The phase-I part of the new greenfield steelworks will be put on stream in June 2011.

Wuhan Steel has set up a strategy of taking control over Southwest China. It has bought several steelworks in the area, including Liuzhou Steel and Kunming Steel. Its attempts to buy Panzhihua Steel - the largest steelworks in the region - were rejected after Panzhihua decided to accept a bid by Anshan Steel.

Source China Metals e-mail chinametal@xinhua.org