SHENYANG -- China's two major steelmakers, Ansteel and Ben Gang Group Corporation, inked a deal on Friday to kick off their merger and restructuring that will create the world's third-largest steelmaker.

According to the deal, the owner of Ben Gang -- Liaoning Province's State-owned Assets Supervision and Administration Commission -- will transfer a 51-percent controlling stake in the steelmaker to Ansteel, and Ben Gang will become a subsidiary of Ansteel.

After the merger, Ansteel will have an annual production capacity of 63 million tonnes of crude steel, ranking third worldwide after China Baowu Steel Group Corporation Limited and Luxembourg-headquartered ArcelorMittal.

The merger will increase the consolidation of the steel industry, step up high-quality development of the industry, and forge a world-class steel firm, according to a statement released by Ansteel, or Angang Steel Co Ltd.

Founded in 1916 and 1905 respectively, Ansteel and Ben Gang are both located in Northeast China's Liaoning province.

"After the realignment, we will realize resource integration and coordinated development in R&D, procurement and sales, making a contribution to the revitalization of Liaoning and Northeast China," said Tan Chengxu, chairman of Ansteel.

By 2025, Ansteel targets an annual output of about 70 million metric tons of crude steel and 50 million tons of iron concentrate, generating around 300 billion yuan (about $46.3 billion) of operating income.