Steel Companies Create JV for Chinese Steel Mill

Arcelor, Nippon Steel Corp. and Bao Steel have signed an agreement to create a joint venture steel mill in China. The project will have an annual production capacity of 1.7 million metric tons of flat carbon steel, mainly for automotive applications. The new activity will be located in Shanghai next to Bao Steel upstream production facilities. It will comprise cold rolling and galvanizing operations.

The joint venture fits in the context of the global strategic alliance between Arcelor and Nippon Steel.

"This new joint-venture with our partners Bao Steel and Nippon Steel is a strategic move to accompany our global automotive customers and to seize the tremendous growth opportunities offered by the Chinese market." said Guy Dolle, Arcelor’s CEO.

According to the joint-venture agreement, Arcelor will take a 12 percent equity share in the new company; Nippon Steel, 38 percent; and Bao Steel taking 50 percent.

The new facility is slated to cost around $800 million, and is expected to begin supplying customers by the second quarter of 2005. Products will include cold rolled steel, galvanized, annealed steel and pure zinc galvanized steel. The two galvanizing lines will have a combined capacity of 800,000 metric tons per year.