OREANDA-NEWS. December 14, 2015. Fitch Ratings today says China Minmetals Corporation's (Minmetals, BBB+/Stable) takeover of China Metallurgical Group Corporation (CMGC) confirms Minmetals' important role in consolidating the domestic mining and non-ferrous metal industry, securing China's strategic non-ferrous metal reserves overseas and improving the competitiveness of China's mining industry against overseas rivals. The reorganisation has no immediate impact on Minmetals' ratings.

On 8 December 2015, China's State-owned Assets Supervision and Administration Commission (SASAC) said that Minmetals would take over CMGC and its operations. Both Minmetals and CMGC are wholly owned by SASAC. The combined entity would have generated CNY551bn in revenue and CNY32bn in EBITDA based on 2014 results. Fitch considers this revamp another attempt by SASAC to create an internationally competitive non-ferrous metal company with engineering and construction capabilities in the field.

Fitch already takes into consideration Minmetals' role in consolidating the domestic mining and non-ferrous metal industry in the company's rating. Minmetals is rated three notches below China's sovereign rating (A+/Stable) in line with Fitch's top-down approach in its Parent and Subsidiary Linkage rating criteria and taking into account the market-driven nature of the metals and mining industry. Fitch will review the company's strategic and operational linkage with the state upon completion of the reorganisation, but we do not expect the linkages to change given available information at the moment.