Deadly Steelworker Disturbance Prevents Merger

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Jul 27, 2009 – 6:10:15 AM

On Monday July 27, officials said that a steelworker disturbance in northeastern China in which a company executive was killed has ended plans for a merger between a giant state-run plant and a private Beijing firm.

An emergency notice announcing the abandonment of the deal was made Friday after thousands of steelworkers clashed with police in a protest over plans by Beijing’s Jianlong Group to take a majority stake in the state-owned Tonghua Iron and Steel Group.

The official Xinhua News Agency and other state-run media reported that workers beat Jianlong executive Chen Guojun to death Thursday outside the plant in Tonghua city, Jilin province, after he announced that only 5,000 out of 30,000 workers would be retained after the merger.

Beijing is trying to streamline China’s sprawling steel industry, the world’s largest, by orchestrating a series of mergers aimed at creating globally competitive producers. The mergers often are accompanied by layoffs that sometimes spark complaints that workers receive too little severance pay.

The China Daily newspaper said crowds dispersed after the announcement about the end of the deal was made.

Jianlong had a stake in Tonghua since 2005 but suffered losses after steel prices dropped and jettisoned the company, the paper said. It said Jianlong revived the takeover plan after steel prices rebounded, making the business profitable again.

Both Xinhua and China Daily reported that workers also blocked ambulances, police and government workers who had tried to rescue Chen.