The world's largest steelmaker ArcelorMittal, which made an unsuccessful attempt to acquire a 20-30 per cent stake in China's Angang Steel Co Ltd in a $5- billion deal two months ago, now plans to join hands with Angang Steel, to seize more development opportunities.
ArcelorMittal CEO Lakshmi Mittal had, in a letter to Zhang Xiaogang, chairman of Angang Steel, sought to acquire a 20-30 per cent stake in China's second-largest steel producer.
Xiaogang who had then turned it down, did not, however rule out an alternative form of partnership.
According to The Daily Telegraph, the talks were part of Mittal's strategy to increase the company's presence in the Chinese steel industry.
''There is no formal proposal for any kind of joint project involving Angang Steel" ArcelorMittal CEO Lakshmi N Mittal told The Financial Times.
"However, I had an informal discussion with Zhang about various possibilities. As part of this, I tossed around a number of ideas,' he said, adding "This is similar to the discussions I have with many steel companies."
Angang, which is 67 per cent owned by Anshan Iron and Steel, a Chinese government company, is listed on the Hong Kong Stock Exchange.
Angang produced 16 million tonnes of steel last year against Chinese industry leader Baosteel's output of nearly 30 million tonnes.
ArcelorMittal, which holds a 32-per cent stake in Hunan Valin Tube Steel & Wire, a leading Chinese steelmaker, is also poised to take control of another steel maker, China Oriental through a series of stock market deals.
Last year ArcelorMittal accounted for 13 per cent of world steel production outside China.
Reports quoting Angang Steel officials said only 1 to 2 per cent of the Chinese steelmaker would likely be sold to the Luxemburg-based steel giant.
A partnership with ArcelorMittal would give Angang new steelmaking and mining cabilities as also advanced technologies. The company would also be able to sharpen its competitive edge in the international marker, once it teams up with ArcelorMittal.
ArcelorMittal, with 310,000 employees, operates in more than 60 countries in Europe, Asia, Africa, and America. Apart from the steelmaking, it is engaged in automotive industry, construction, household appliances and packaging business.
The company had revenues of $105.2 billion in fiscal 2007, and its crude steel output stood at 116 million tonnes, accounting for around 10 per cent of the world's total.
Angang Steel produced over 16 million tonnes of iron and 16 million tonnes of steel last year and it successfully achieved a series of records in technology innovations, including coke ratio of iron smelting, comprehensive coke ratio, capacity factor of blast furnace, ore loss reduction in furnace, and other technical and economic indicators.