Liaoning's province-owned Benxi Iron &Steel (Group) Co., Ltd (Bxsteel) signed a restructuring plan with Benxi-based Beitai Iron & Steel Group recently. After the restructuring of the two firms, they will be incorporated into Anshan Steel Company Ltd. (Ansteel) to form a larger Ansteel.

This would be the largest merger and acquisition case in the domestic industry since the industry's restructuring plan was released by the authorities last year.

Beitai has a similar production capacity as Bxsteel (about 10 million tons), benefiting by the domestic investment in the infrastructure, it has had a better profitability than Bxsteel in recent years. In 2009, Bxsteel reported a loss of 1.96 billion yuan ($287 million), down 959.31 percent year-on-year, while the latter made a net profit of 759 million yuan.

The products of the two are in complementary. This is the second time the two firms planrestructuring since their last failed, in 1999.

Ansteel's production capacity will increase by 10 million tons to reach more than 50 million tons via thiswith the deal, exceeding Baoshan Iron & Steel Co., Ltd. (Baosteel), China's most profitable steel mill, and Hebei Iron & Steel Group, China's largest steel firm in scale.

"Ansteel is now restructuring the Panggang Group Company Ltd., in the future, a large Ansteel will be formed," a senior official from Beitai Iron & Steel Group said.

In China's Northeast, the major steel mills are Ansteel, Bxsteel, Baitai, Dongbei Special Steel Group Co., Ltd. (DSSC), Lingyuan Iron & Steel Co., Ltd and Tonghua Iron & Steel Group. Currently, except Tonghua, other steel mills have been all incorporated into Ansteel.

Senior officials from Ansteel said previously that the company wants to incorporate Ansteel, Panggang and Bxsteel into a large group. If achieved, Ansteel's capacity would exceed 65 million tons, surpassing by far the Hebei Iron & Steel Group.

Ansteel's biggest competitor in the future will not be Baosteel or Hebei Iron & Steel Group, but the world's largest steel firm Arcelor Mittal, media reports commented.