Steel workers in a second mass protest against the purchase of their plant by a private company in Henan Province dispersed Saturday.

Up to 400 workers and their relatives gathered Saturday morning inside and outside the compound of the Linzhou Steel Corporation (LSC), pressing for a suspension of the purchase by Fengbao Iron & Steel Co. Ltd., Zhang Quanfu, a representative of the workers, told Xinhua.

The workers also demanded higher redundancy compensation and the resolution of issues concerning unpaid wages during the plant's restructuring.

The crowds dispersed after the government mediation team, comprising officials with the Communist Party of China and the government, reiterated the decision to temporarily call off the takeover, Zhang said.

The protest followed a mass demonstration that began on Tuesday at the site and ended at 3 a.m. Saturday, which involved up to 3,000 people, said Li Rongsheng, another workers' representative.

Dong Zhangyin, sent by the local state-owned assets supervision and administration commission to oversee the takeover, left the site Saturday morning after the demonstrators blocked his exit, according to the government of Linzhou City.

The state-owned LSC, established in 1969, has 5,122 workers and pensioners on the regular payroll and 2,995 workers on the job.

It produces about 400,000 tonnes of pig iron and 100,000 tonnes of cement a year and is China's only production base of low-titanium iron.

Though LSC is in Anyang City, authorities in Puyang, which was formed from part of Anyang, administer its operations.

Restructuring of the plant along commercial lines began in August 2008 under the approval of the government of Puyang and the factory suspended all operations in March, sending all employees home.

Workers had tried to resist the privatization by blocking the traffic twice since March.

LSC was sold to Fengbao, based just one kilometer from LSC, in an auction for 259 million yuan (37.9 million U.S. dollars) on July 24, triggering the mass demonstration by workers dissatisfied with the proposed compensation of 1,090 yuan (159.5 U.S. dollars) for each year of service, said Li.

Many workers also believe LSC is worth 330 million yuan, but was undervalued at the auction, he said.

They also said Fengbao had a bad reputation for unpaid wages and lack of work insurance.

However, Fengbao had insisted the deal was conducted legally and should be honored, said Liu Haiying, director of the Linzhou publicity department.

The mediation team held meetings with representatives from LSC and employees about the future reform.

The auction was held the very day when a protest erupted at a steel factory in the northeastern province of Jilin, where workers beat the newly appointed general manager to death.

Chen Guojun, general manager of state-owned Tonghua Iron and Steel Co. Ltd., was killed during a protest against a proposed merger by about 1,000 workers on July 24.

Chen was appointed by Beijing-based Jianlong Heavy Machinery Group, the company planning to buy Tonghua.

Workers feared wage cuts and layoffs if Jianlong, one of the largest private steelmakers in China, took control of Tonghua by increasing its stake in the plant to 65 percent from 36 percent.

The incident forced Jianlong to terminate its merger plans and the leadership reshuffle of Tonghua.

The All-China Federation of Trade Unions issued a circular Friday, urging enterprises to safeguard employees' legitimate rights in restructuring, such as right to know, right to participate in, right to make decisions and right to supervise.

"The restructuring plan should be submitted to the congress of employees' representatives or employees for deliberation...a resolution not openly announced or without the adoption of the congress of employees' representatives will be considered invalid," it said.

(Xinhua News Agency August 16, 2009)