Mumbai: Global steel major Arcelor Mittal has failed to strike a joint venture deal with China's Baotou Iron and Steel Group as the talks collapsed after Beijing failed to clear Lakshmi Mittal's demand for a controlling stake of 50-per cent in the joint venture.
China's steel industry regulations bar overseas steel makers from taking a controlling stake in joint ventures.
Lin Donglu, chairman, Baotou Iron and Steel, confirmed the failure of striking a deal with the world''s largest steel maker, Arcelor Mittal, and said his company had ended talks and is now scouting for local partners.
"We are not talking about any actual cooperation anymore," the China Daily quoted Lin as saying.
"Because Arcelor Mittal wants to take a stake of 50 per cent or so in the venture, we failed to negotiate a deal," Lin said, adding the company is now looking at local partners, such as Shanghai-based Baosteel Group, China''s biggest steel maker.
However, Arcelor Mittal plans to raise its stake in Hunan Valin Steel Tube & Wire Co when the Chinese steel maker issues new shares.
Arcelor Mittal, which holds a 29.5-per cent stake in Hunan Valin, will take 49.3 per cent of the 520 million new shares on offer, boosting its holding to 33.3 per cent.
Hunan Valin will use the 2.3 billion yuan raised from the share sale for growth, the company said yesterday.
Sridhar Krishnamoorthy, China manager for Arcelor Mittal, said the share placement would raise funds to help Hunan Valin increase its stake in its subsidiaries.