Hunan Valin And ArcelorMittal Sign Electrical Steel JV Agreement

Hunan Valin Steel Group Co., Ltd. and ArcelorMittal have signed a joint venture agreement for the production and sales of electrical steel, one more milestone following the auto sheet JV agreement signed by both parties last June.

These two JVs constitute part of the realization of the framework agreement signed by Valin and ArcelorMittal in November last year. The new JV, named Valin ArcelorMittal Electrical Steel Co., Ltd., has a registered capital of CNY2.6 billion, each party retaining 50% of the shares. This JV will build cold rolling and processing facilities for the production of non-grain oriented and grain oriented electrical steels. The total investment is estimated at CNY6.5 billion, aiming for an annual production of 400,000 tons of non-grain oriented and 200,000 tons of grain oriented steel. ArcelorMittal will transfer its latest NGO and GO technologies to the joint venture.

Meanwhile, Valin Lian'gang, a subsidiary of Valin Steel Tube & Wire, signed a supply agreement with the joint venture. In order to supply high-quality hot-rolled substrate to the electrical steel JV, Valin Liangang also signed a Technology License Agreement with ArcelorMittal for the transfer of NGO and GO upstream technologies. ArcelorMittal's R&D centers in Brazil and Europe are dedicated to continuing product improvement as well as development of new, higher performance grain oriented grades.

Zheng Baiping, general manager of Valin Liangang stated that currently oriented steel and high-grade non-oriented steel production in China is limited to a few large leading steel-makers and the electrical steel JV will be ready to start production in 2010 and will supply competitive high end products to the high end electrical steel market.

LI Xiaowei, Valin Group's Chairman commented that Valin continues to target high-end flat rolled demand, supported by the technical platform set up with ArcelorMittal and adjusting its product mix, developing its own core technical and innovative capabilities. Electrical steel is the latest addition to their product line, following high end heavy plate and automotive steel products.

Gonzalo Urquijo, a member of ArcelorMittal's Group Management Board stated that this electrical steel JV will allow Valin and ArcelorMittal to produce the latest generation and very high performance electrical steel grades in China, thanks to the technology transfer and the continuing R&D efforts from ArcelorMittal. He added that ArcelorMittal has recently decided to expand its European and Brazilian operations and that they consider this market as strategic considering the strong demand linked to the increasing need for electricity distribution and consumption.

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