Baosteel Group has begun the process of buying Panzhihua Iron and Steel (Group) Co, based in southwest China's Sichuan province, the Beijing-based China Times reported, citing sources.

    The newspaper quoted sources from the China Iron and Steel Association as saying that Baosteel has initiated talks with Panzhihua Iron and Steel.

    The takeover bid is the result of the State Council and the State-owned Assets Supervision and Administration Commission (SASAC) allegedly not being satisfied with Panzhihua Iron and Steel's performance, the report said.

    Panzhihua Iron and Steel deputy general manager Chen Xingui told the newspaper that visits by Baosteel were to review the Sichuan steel market after the earthquake, but the Baosteel representatives did not mention any intent to buy the company.

    The newspaper also quoted a source from the Baosteel's board secretary's office as saying that the office is not aware of such plans to purchase Panzhihua.

    According to earlier media reports, Angang, based in northeast China's Liaoning province, and central China's Wuhan Iron and Steel are also seeking to merge with Panzhihua Iron and Steel.

    Deng Qilin, the managing director of Wuhan Iron and Steel, said earlier that his company is proceeding with plans to merge with Panzhihua.