Hebei Iron and Steel has fallen into capital during the year

In November last year, Hebei Iron & Steel, an indirect controlling shareholder of Hebei Iron & Steel, issued a commitment to announce that it will pass its iron ore business assets through legal procedures to inject into listed companies at fair and reasonable market prices. Hebei Iron and Steel Group said at that time that it would actively create favorable conditions for the injection of assets in the iron ore business, and immediately start the injection process after the public issuance and acquisition of Sinbo Steel Co., Ltd., and strive to have the first tenements before December 31, 2012. Iron ore business assets that are clear and conducive to improving the profitability of listed companies are injected into Hebei Iron and Steel. According to the report, the first batch of assets to be injected mainly includes Sijiaying Iron Mine, Heishan Iron Mine, Shirengou Iron Mine, etc. It is estimated that the reserve of resources shall not be less than 1 billion tons, and the production capacity of iron concentrate powder shall not be less than 7 million tons per year. . The remaining iron ore business assets will continue to be injected as conditions mature, until the group's iron ore assets all enter Hebei Iron & Steel.

As this promise was not fulfilled within this year, Hebei Iron & Steel gave three reasons in the announcement: First, the capital market continued to be sluggish, and Hebei Iron & Steel's stock price was lower than its net assets per share for a long time. According to the company's three quarterly report, Hebei Iron and Steel's current net assets per share is 4.03 yuan, but the company's stock price has been hovering below this year, only reported to close at 2.74 yuan on December 27. As Hebei Iron & Steel is a state-owned holding company, in order to avoid the loss of state-owned assets, the fixed price increase cannot be lower than the net assets.

Second, iron ore prices have continued to decline since the beginning of this year, resulting in a decline in the profitability of mining assets. The company stated that if iron ore assets are injected at present, it will affect the profitability of listed companies. According to the reporter, this year, iron ore prices hit a record low in the second half of the year in the second half of the year due to the sluggish demand from the steel industry.

In addition, the iron ore business assets to be injected this time involve a large scale, a wide range, a long history of development, expansion of mining warrants, renewal of reserves, verification of reserves, and improvement of asset ownership, which involve a lot of basic work and Government approval process.

Despite all the above-mentioned difficulties, Hebei Iron & Steel has obviously not closed its door to asset injection. In the announcement, the company stated that the major shareholder, Hebei Iron and Steel Group, will continue to actively implement the gradual infusion of mature iron ore business assets to listed companies, up to iron, in line with the principle of consistently supporting Hebei Steel’s sustainable development and being accountable to the majority of small and medium-sized investors. The ore business assets have all entered Hebei Iron and Steel's commitment."