After having been rebuffed in its bid to acquire a 70-per cent stake in China Oriental by Chinese regulators, ArcelorMittal, the world's largest steel company, has signed a joint venture agreement with Hunan Valin Steel Group Co, Ltd. to make electrical (silicon) steel.

This follows the auto sheet JV agreement signed by both parties last June. These two JVs constitute part of the realisation of the framework agreement signed by Valin and ArcelorMittal in November last year. (See: ArcelorMittal launches automotive steel joint venture in China)

This JV will build cold rolling and processing facilities for the production of non-grain oriented (NGO) and grain oriented (GO) electrical steels.

The new JV, named Valin ArcelorMittal Electrical Steel Co., Ltd., has a registered capital of 2.6 billion RMB, ($378 million) with each taking an equal stake in the venture, the investment in which is estimated at 6.5 billion RMB ($948 million).

This JV is aiming for an annual production of 400,000 tons non-grain oriented and 200,000 tons 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 said: "Currently oriented steel and high-grade non-oriented steel production in China is limited to a few large leading steelmakers. Our Electrical Steel JV will be ready to start production in 2010 and will supply competitive high end products to a high requirement electrical steel market."

Gonzalo Urquijo, member of ArcelorMittal's group management board, said, "This Electrical Steel JV will allow Valin and ArcelorMittal to produce the latest generation and very high performance electrical steel grades in China. It is a significant step forward in ArcelorMittal's strategy for supplying the market worldwide with high quality electrical steels.''

Valin Group is a large-sized enterprise set up by three steelmakers in Hunan province in 1997 --- Xiangtan Iron & Steel, Lianyuan Iron & Steel, and Hengyang Steel Tube, currently with 57,000 employees including 12,000 technical staff.

Valin Group now has over 10 subsidiaries under direct or indirect control, including Xiangtan Iron & Steel, Lianyuan Iron & Steel, Hengyang Steel Tube, Nanfang Building Materials, etc., with a stable operating and governance system based upon sound capitals and assets.