Baogang Group – the iron and steel manufacturer based in Baotou, in North China's Inner Mongolia autonomous region – signed a framework agreement on June 8 with two units of the Baowu Group to conduct joint operations in the new materials industry, according to a report in the Baotou Daily.

Under the accord, the two parties will cooperate in production, technology and market supply chains.

They will jointly build a tar deep processing plant with an output of 300,000 metric tons a year.

Baowu Carbon Material Technology Co, a subsidiary of Baowu Group, is currently the world's largest tar manufacturer, with an annual output of 2.48 million tons of tar and it is also a leading company in the new carbon materials industry in the country.

Baowu Clean Energy Co is an integrated energy company specializing in the production of hydrogen, new energy, air and natural gas. Its rare gas production accounts for 30 percent of the country's capacity.

The cooperation will reportedly rely on Baogang's oxygen production system and air compressor system, with the help of Baowu's clean technology, management and capital advantages. This will promote the upgrading and transformation of Baogang's oxygen production system equipment, reduce processing consumption and achieve improved energy consumption.

Under the agreement, the three companies will speed up the transformation from the traditional coal chemicals industry to the new carbon materials industry chain. Through this, they are expected to achieve the transformation and upgrading of the coal coking industry.

The three companies will reportedly promote the development of green energy in the region.

They will aim to improve the utilization efficiency of Baogang's assets and resources – in oxygen, nitrogen, compressed air, hydrogen and other areas – and help it achieve carbon peak and carbon neutrality goals.