Sinosteel gets an eco-friendly evaluation

Cast Steel Product Sinosteel Co. Ltd. is currently having its environmental credentials assessed so that it can apply to the China Securities Regulatory Commission (CSRC) to execute its planned initial public offering, a senior official with Sinosteel Group said today. Huang Tianwen, president of Sinosteel Group, confirmed the company's current activities to Interfax, but said that no final timetable for listing has yet been settled. "As previously reported, the Sinosteel A-share IPO is estimated to rise between RMB 10 billion ($1.44 billion) and RMB 20 billion ($2.88 billion). In this case, Sinosteel would have to wait until the second half of this year, when the A-share market will have becomes strong enough to accept such a huge IPO," analyst Wang Qiang with Industrial Securities said. The environmental evaluation, conducted under a Ministry of Environmental Protection (MEP) program, is a necessary step companies must take before applying to the CSRC to IPO on the domestic stock market. The MEP, formerly known as the State Environmental Protection Administration (SEPA), has already approved Sinosteel’s initial environmental protection qualifications, after reviewing the environmental impact of Sinosteel’s 16 subsidiaries and 26 IPO fund-financed projects involved in heavily polluting industries such as mining, ferroalloy, refractory materials and roller manufacture. However, before it can obtain full MEP approval, Sinosteel must pass a 10-day period in which members of the public can comment on and evaluate the company's environmental performance. This period of public evaluation for Sinosteel commenced on May 20, according to an MEP announcement. "As a large-scale state enterprise, Sinosteel has been paying much attention to environmental protection issues, so the eco-friendly evaluation shouldn't be an obstacle for its IPO," Wang said. "However, the MEP approval should be regarded as a milestone in Sinosteel's IPO preparations because it has caused a lot of trouble for Ferrous and nonferrous miners and smelters in the past. For instance, Fujian Province's Zijin Mining Group Co. Ltd. had to delay its IPO due to prolonged efforts to pass the eco-friendly evaluation," Wang said. Some 26 projects are to be financed with funds raised through the planned IPO, including Sinosteel's acquisition of prospecting rights to an iron ore deposit in Anhui Province, an 80,000-ton ferronickel facility and a 5 million-ton iron ore fine processing and storage project in Hebei Province, a special ferroalloy production base in Jilin Province, and various machinery manufacturing projects. Huang, Sinosteel Group's president said that a majority of the funds raised will be used to acquire overseas mineral resources however, though he declined to reveal the specifics of any such plans. Sinosteel Group is currently offering to acquire Australian iron ore miner Midwest in full for a consideration of AUD 1.36 billion ($1.38 billion), by expanding the 19.89 percent stake it already holds in the miner. The deal is still subject to approvals from a minimum 50.1percent of the Midwest shareholders. "In the event that we fail to obtain the required shareholder approvals, we will try alternative routes to acquire Midwest," Huang said.