BEIJING - Sinosteel Group, China's largest iron ore trader, has announced the appointment of Jia Baojun as its president to replace the outgoing Huang Tianwen, according to the company's website on Monday.
The appointment was announced by the State-owned Assets Supervision and Administration Commission (SASAC), which is both a regulator of, and shareholder in China's largest State-owned companies, without offering any reason.
Prior to the appointment, Jia, 53, was the president of Sinosteel Corporation Limited, a Sinosteel subsidiary, from 2010. Before joining Sinosteel Group, he was the vice-president of Wuhan Iron & Steel Group, China's third largest steelmaker.
Jia's appointment has been seen as an SASAC attempt to drive Sinosteel's overseas investments, by banking on his wide international experience at Wuhan Steel, sources said.
Aiming to be self-sufficient in iron ore supplies within three to five years, Wuhan Steel has recently been actively investing in overseas assets.
"Jia's new appointment may help Sinosteel to be more aggressive in overseas acquisitions. Sinosteel's next target could be copper resources," said the source.
Fifty-six-year-old Huang Tianwen, who took the helm at Sinosteel in 2003, was removed by SASAC because of financial mismanagement, according to a source familiar with the matter.
The source said SASAC was considering Huang's removal six months ago, following an investigation by State auditors into unexplained losses at Sinosteel in August.
Huge financial losses were first discovered in October 2008, when State officials said Sinosteel lost 2.6 billion yuan ($399 million) in advanced payments for steel that it never received from the privately owned Shanxi Zhongyu Iron and Steel Co, according to reports in the Caixin Weekly.
Sinosteel and its subsidiaries had prepaid 4.2 billion yuan for steel and iron products that Shanxi Zhongyu was contracted to supply. However, these were never delivered.
The financial losses had also forced Sinosteel to shelve its planned IPO.
In an interview with China Daily in January 2010, Huang said Sinosteel submitted documents to gain regulatory approval for an IPO on the A-share market and expected to receive the green light by June 2010.
However, the proposed listing was suspended due to the losses.
Sources close to the IPO deal told China Daily that Sinosteel first chose the consulting and accounting firm PricewaterhouseCoopers to help with the listing exercise.
Soon after, the job was transferred to a local auditing firm because of significant problems in financial management.