Luxembourg: The world's largest steel maker ArcelorMittal on Friday said it will increase its stake from 33 percent to 49 percent in a joint venture with China's Valin Steel that aims to tap the Asian nation's fast growing automotive market.
"ArcelorMittal and the Valin Group on Friday announce that ArcelorMittal will increase its shareholding in the downstream automotive steel joint venture, VAMA (Valin ArcelorMittal Automotive), from 33 percent to 49 percent," the company said in a statement.
However, the company did not share financial details.
In-line with the new shareholding agreement, Valin and ArcelorMittal will increase their planned capacity by 25 percent from 1.2 million tonnes (MT) to 1.5 MT, the statement said.
"Capital investment will also increase by 15 percent to RMB 5.2 billion and VAMA has signed purchase agreements totalling RMB 1.8 billion for key equipment including cold rolling facilities, continuous annealing and galvanising lines," it added.
The joint venture is expected to become operational in the first half of 2014.
VAMA is focused on establishing itself as a premier supplier of high-strength steels and value-added products for China's fast growing automotive market.
ArcelorMittal said in addition it could recalibrate its share-holding in Hunan Valin Steel.
The two companies have finalised a share swap arrangement, under which, "ArcelorMittal could sell up to 19.9 percent of the equity (600 million shares) it holds in Hunan Valin Steel to Valin Group."
However, it would retain a 10.07 percent shareholding in Valin Steel as part of a long-term strategic cooperation.
ArcelorMittal's Group Management Board member responsible for China, Sudhir Maheshwari commenting on the development said, "We have agreed with Valin Group to recalibrate our shareholdings in Valin Steel to focus on China's fast growing automotive steel market."
Hunan Valin Iron & Steel Group is one of top 10 Chinese steel producers with steel production capacity of 22 MT.
In 2011, the company reported a steel output of 18.22 MT. It produces plate, hot rolled coil and cold rolled coil, seamless steel tube and pipes, wire rod and bar with 5000 specifications and sizes.
ArcelorMittal is the world's largest steel production and had crude steel output at 90.6 MT in 2010, 6 percent of the global output.
PTI
First Published: Friday, July 06, 2012, 08:43