Du Shuanghua on the Sale of Rhizao
Du Shuanghua is the chair of Rhizao Steel Holding Group, one of China’s largest private manufacturers. Rhizao Steel is one of the largest steel manufacturers in the world, which was established in 2003. Four years later, Rhizao Steel and Mount Gibson signed a fifteen-year contract with terms to purchase about 1.5 million tons of iron or from Gibson every year, which raised the power of the company’s stakes.
The following year, Du Shuanghua tried to block the takeover of Rhizao Iron by Shandong Steel Group, where he sold 30% equity state of the company at a low cost to a hong kong-listed business Ki Yuan Holdings. The plan failed as it was considered politically dangerous to the owners of Kai Holding.
The sale of Du Shuanghua 30% Rhizao ownership stake was under the original 2009 plan, which stated that Rhizao Steel was to merge with Shandong Iron & Steel. The resulting merged company was to have 67% Shandong Steel Group ownership and the remaining 33% owned by Du.
A court arbitration in 2010 stated that Rhizao didn’t fulfill its obligations under the agreement, which resulted in a $114 million loss. The company witnessed significant changes during the following years, especially in the ESP production lines.
According to reports, these changes involved the Weifang Special Steel Group Juneng Special Steel and Rhizao Iron & Steel with a common goal of relocating the plant and equipment to Rhizao, a coastal location.
In 2020 Rhizao Steel underwent an expansion which cost the company RMB 33 billion making the company attain an all-time-high steelmaking capacity of 17 metric tonnes per year. The continuing project is expected to be done by 2022 and will incorporate the construction of two 300 tonnes converters and 3,000 cubic meter blast furnaces.
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