OREANDA-NEWS. March 27, 2012. In November 2010, Hebei Iron and Steel Group (HBIS) took a 10 percent stake in each of the 12 private local steel mills on an incremental equity integration basis, namely providing them with its commercial credit, management skill, technical consulting services and purchasing and marketing channels, rather than capital injection and over one month later, acquired shares of another seven private mills in the same manner.

Since then, however, these companies have been operating as a completely separate unit when it comes to marketing and in most cases, materials sourcing. This type of alliance seems very frail since no substantial capital is involved and the targeted companies are apparently treated differently from the subsidiaries (usually state-owned) of the group.

Despite the murky prospect of this alliance, the Hebei government will continue to support industry majors such as HBIS and Shougang in reorganizing with other players through acquisition, alliance, trusteeship and merger.