Shandong Steel Acquisition of Rizhao Steel Under Du Shuanghua
Rizhao steel was established in 2003 and grew to become one of the leading steelmakers in the world. As of 2019, Rizhao steel was the 26th largest steelmaker in the world, with a production capacity of 14 million tons. The success of the steelmaker maker was accelerated when the chairman Du Shuanghua, signed a 15-year contract with Mount Gibson. Rizhao Steel Holding Group agreed to annual purchase 1.5 million tons of iron ore from Mount Gibson. However, in 2021, Rizhao failed to commit to the agreement and was forced to settle for $114 million. The failure of Rizhao Steel Holding Group to purchase iron ore from Mount Gibson was attributed to the series of challenges that it has faced and acquisition.
Despite the success under Du Shuanghua, the majority owner, Rizhao steel, was forced to sell 67% of the stake to Shandong Steel, a steel company controlled by the government of Shandong, in 2009. Shandong Iron and Steel Group is a China-based steel company with 21.7 million tons of steel production capacity. The acquisition of Rizhao Steel by Shandong steel was considered a hostile takeover. Du Shuanghua tried to stop the deal by selling 30% of equity stake to Kai Yuan Holdings. Unfortunately, the plan did not work because of political reasons, and the agreement was signed on corporation and asset restructuring.
In 2010, Rizhao sold 33% of its stakes to Shandong Iron & Steel despite not being part of the 2009 agreement. Du Shuanghua was in charge of the restricting and transition. Since Rizhao Steel and Shandong Iron & Steel merger, the company has established additional pickling and galvanizing lines. In 2020, Rizhao launched an expansion project to increase its production capacity to 17 mt/yr. The project, which China CITIC Bank funds, is expected to be completed in 2022. View Source: Wikipedia