Hegang takes control of Duferco
China’s Hebei Iron and Steel Group (Hegang) will take a majority stake in Swiss-based trader Duferco International Trading Holding (DITH), Duferco confirmed on Tuesday. The move will see Hegang (HBIS) gain captive export demand and boost the prospects of its international projects, including the creation of a 5 million tonne/year steelworks in South Africa, Kallanish notes.
Hegang chairman Yu Yong put the deal in perspective of the company’s internationalisation strategy. “HBIS is committed to build the world’s most competitive iron and steel enterprise. The strategy of internationalisation is the inevitable path and an important support for our future development. HBIS and DITH strengthening cooperation makes a significant step in the corporate internationalisation,” he says.
Duferco chairman, Bruno Bolfo meanwhile said, “this deal will provide Duferco and its employees with a very strong base on which to secure the business for the next generations.”
Duferco will gain access to a steady supply of competitively-priced steel from Hegang. Since Hegang subsidiary Tangshan Iron and Steel (Tanggang) took a 10% stake in Duferco in 2013, Duferco has regularly been able to sell coil into other markets at a discount of as much as $10/t, thanks to financing arrangements with Tanggang, competing traders complain.
Hegang will likely gain access to Duferco’s trading network in Africa if it decides to proceed with a 5 million t/y integrated steelworks project in South Africa, Kallanish notes. Duferco could also provide iron ore from an offtake agreement with the neighbouring Ferrum Iron Ore project, if that begins production.