SHANGHAI, Dec 30, 2008(Reuters) - Tangshan Iron & Steel Co said on Tuesday that it had agreed to merge with two smaller Chinese steel makers to form one of the country's biggest listed steel producers.

 

The company said it would conduct share swaps to merge with Chengde Xinxin Vanadium & Titanium Co and Handan Iron & Steel Co.

 

All three companies are already part of the same business group, the Hebei Iron and Steel Group. The merger is a first step towards listing all the group's major steel assets on the stock market, Tangshan said.

 

Under the plan, which needs approval by shareholders and government bodies, one Handan Steel share would be swapped for 0.775 Tangshan shares, while one Chengde Xinxin share would be exchanged for 1.089 Tangshan shares.

 

In 2007, firms which now belong to the Hebei Iron and Steel Group produced about 31 million tonnes of crude steel, slightly exceeding the roughly 29 million tonnes produced by the Baosteel Group, which was at that time China's biggest steel maker.

 

The Chinese government is pushing steel makers to consolidate as a way to increase efficiency and make the industry globally competitive.