Tangshan Iron & Steel Group is to merge with its smaller rival Handan Iron & Steel Group, the Wall Street Journal reported, citing a state media. The combined entity – to be known as Hebei Steel, after the province where both companies are based – will supplant Baosteel as China’s number one steel producer with an annual production capacity of 37.15 million metric tons of iron and steel. Annual capacity is set to reach 50 million tons by the end of 2010. Beijing is keen to consolidate the country’s steel industry, phasing out the small operations that are often poorly run and highly polluting in favor of larger, more efficient and globally competitive players. Tangshan Iron & Steel Group has a subsidiary listed on the Shenzhen Stock Exchange.