State-owned Sinosteel Corporation is poised to sharpen its competitive edge in providing supplementary services to the country's steel industry by acquiring over 50 percent of a carbon producer.

Beijing-based Sinosteel is a leading raw material provider to major Chinese steel manufacturers, dealing with trade transactions in iron ore, chrome ore, coke, manganese ore and scrap steel.

People close to the negotiations yesterday said Sinosteel would pay around 500 million yuan (US$62.5 million) for Jilin Carbon Co. Ltd., China's largest carbon enterprise, which is located in Jinlin city in northeast China's Jilin Province.

The stakes were acquired from the carbon producer's parent company, Jilin Carbon Group following three months of negotiations.

Huang Tianwen, president of Sinosteel, said the acquisition of Jilin Carbon would improve Sinosteel's overall competitiveness in the industry.

The deal is expected to broaden Sinosteel's carbon product supplying channels and lower its operation costs.

Jilin Carbon Co. Ltd. will be able to take advantage of Sinosteel's industrial chain and capital, which it could use for future research and development in order to increase its market share in the carbon product sector.

Huang expected that after restructuring they would expand Jilin Carbon's capabilities and hoped "it would develop into the third or the second largest in the world in three to five years."

Jilin Carbon, the largest carbon producer in China and the fourth largest in the world, produces over 150,000 tons of carbon products every year.

The deal marked the co-operation between central State-owned enterprises and local stated-owned enterprises, a complimentary combination, said Shao Ning, vice-minister of the State-owned Assets Supervision and Administration Commission (SASAC).

The deal was likely to affect the development of not only China's but also the global carbon industry, Huang said.

Some carbon producers in the United States and Japan have also been seeking co-operation opportunities with Sinosteel recently, he added.

(China Daily December 2, 2005)