China Steel Corp. doesn't plan to sell stakes to mainland rivals

China Steel Corp., Taiwan's biggest mill, has no plans to sell stakes to mainland Chinese rivals after cross-straits investment rules eased, an executive said.

¡°We don't need the money,¡± Executive Vice President Chung Le-min said in a telephone interview. ¡°Some investment bankers have approached us in the past for possible cross-shareholdings with mainland Chinese steelmakers, wanting to earn commissions of 3 percent, 5 percent. 'It won't happen,' we already said.¡±

China from May 1 allowed investments in Taiwan's industries to foster more cross-border business ties. China Steel has gained 14 percent since the announcement on speculation rivals including Baosteel Group Corp., the mainland's largest mill, will expand overseas to counter slower demand at home.

¡°Baosteel and domestic mills would pay more attention to the acquisition of resource companies than buying an overseas rival now because the steel market is weak,¡± said Zheng Dong, a Beijing-based analyst at Guosen Securities Co.

China Steel rose 2.3 percent to close at NT$27.2 on the Taiwan Stock Exchange, narrowing the loss in the past year to 44 percent.

The Kaohsiung-based mill isn't in talks to sell shares to Chinese rivals, Chung said. The Taiwanese government, which owns 21 percent, would probably want to retain control of the only steelmaker owning blast furnaces in the island, he said. The price decline also meant a sale won't be attractive, he said.

China Steel had NT$2.59 billion (US$78 million) in cash at the end of March, and NT$113 billion in liabilities. The mill is planning NT$24 billion of capital expenditure this year, he said.

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