BEIJING: China's state-owned Tangshan Iron and Steel will withdraw from a joint venture steel project in the northern Chinese port of Caofeidian, its former partner Shougang said on Sunday.
Zhu Jimin, chairman of Shougang, China's sixth largest steelmaker, said negotiations on Tangshan's exit from the project were ongoing.
"The two parties are now in talks on details, including when Tangshan Steel would exit the joint venture, how much stake it would sell, and how to reorganise the new shareholders," Zhu told reporters on the sidelines of the National People's Congress, China's parliament.
This is the first time Shougang has publicly admitted that Tangshan Steel intends to quit the joint venture.
Zhu, who was also appointed chairman of the China Iron & Steel Association last month, insisted the Caofeidian project would continue to operate despite changes in the management structure.
After being ordered to leave Beijing as part of efforts to improve the capital's air quality ahead of the 2008 Olympics, Shougang has built a greenfield steel project at Caofeidian in neighbouring Hebei province.
The project, with an annual capacity of 9.7 million tonnes, is operated by Shougang Jingtang Iron & Steel. Tangshan Steel holds a 49-percent stake in Jingtang and Shougang owns the rest.
China plans to move as much as 40 percent of total steel capacity to a series of new coastal bases in the next five years in order to keep down the transport costs of imported iron ore, and improve the environment.
Tangshan Iron and Steel, based in the steel heartland of Tangshan in Hebei province, was previously earmarked as a potential acquisition target of Shougang, but the local government resisted the move.
Tangshan Steel subsequently formed an alliance with local steel firms known as the Hebei Iron and Steel Group, now China's biggest producer.
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