Chinese steelmakers Ansteel Group and Ben Gang formally began the process of merging their operations on Friday, the official Xinhua news agency reported, in a move that will create the world’s third-largest producer of the metal 

State-owned Ansteel is taking a 51% stake in smaller rival Ben Gang from the regional state assets regulator, with no money changing hands in a government-backed restructuring that is part of a drive to consolidate production in China’s bloated steel sector.

The merged entity, which will retain the Ansteel name, will have annual production capacity of 63 million tonnes of crude steel, Xinhua said, after combining the operations of the companies whose headquarters are only some 60 km (37 miles) apart in northeast China’s Liaoning province.

A special conference on the merger was held on Friday morning in the city of Anshan, it added.