State-owned Baowu Steel Group, China's largest steel producer, inked an agreement on Thursday with Magang (Group) Holding Co., Ltd. to secure a 51-percent stake in the latter.
The merger is a big step in China's ongoing consolidation of its steel industry and will help build a world-class steel mill with global competitiveness, according to the company.
Chen Derong, chairman of Baowu, said the partnership was a continuation of the long-term cooperative relationship between the two, as well as a major move in pushing for the supply-side reform of the industry.
Baowu is expecting its annual steel production capacity to increase from 70 million tons to 90 million tons by absorbing Magang.
Formed by the consolidation and restructuring of former Baosteel Group Corporation and Wuhan Iron & Steel (Group) Corporation in 2016, Baowu is now the world's second-largest steel producer.