China’s Tsingshan Holding Group is in advanced talks with state-controlled China Baowu Steel Group to offload some of its stainless steel assets in Indonesia, reported Bloomberg News, citing people familiar with the negotiations.

The sale, which includes Tsingshan’s stainless steel and nickel pig iron manufacturing facilities, forms part of the nickel giant’s strategic review.

Tsingshan is owned by billionaire Xiang Guangda.

One of the sources said that the potential sale deal could be worth $3bn to $4bn and its terms could change.

Claimed to be world’s largest crude steel producer, Baowu Steel is likely to purchase controlling stakes from Tsingshan in some of the integrated production lines in Indonesia’s Morowali Industrial Park in Central Sulawesi province, the sources added.

The two firms started the talks in April 2022 and have already agreed on several key terms.

Discussions are currently underway between Tsingshan and Baowu Steel over details, including operation and sale, following the acquisition.

With the sale of steel assets, Xiang intends to strengthen ties with one of China’s largest state-owned commodity producers while retaining significant exposure to the steel business via Tsingshan.

The sale is also expected to help Tsingshan alleviate liquidity pressures, the sources said.

The acquisition could increase Baowu’s total stainless steel production capacity to more than 13Mtpa with the addition of one million tonnes in Indonesia, according to Bloomberg’s calculation.

Through collaborations with local and overseas Chinese firms, Baowu aims to boost its stainless-steel production capacity to 15 million tonnes by the end of 2023 and 18 million tonnes by the end of 2025.