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Valin and ArcelorMittal to Form Electrical Steel Joint Venture

08/14/2008 - Hunan Valin Steel Group and ArcelorMittal sign joint venture agreement for the production and sales of 600,000 tonnes/year of grain-oriented and non-grain-oriented silicon electrical steel.

Hunan Valin Steel Group Co., Ltd. and ArcelorMittal have signed a joint venture agreement for the production and sales of electrical (silicon) steel. The agreement builds upon the cooperative efforts initiated with the Auto Sheet joint venture agreement signed by both parties last June and the framework agreement signed by Valin and ArcelorMittal in November last year.
 
The new joint venture—Valin ArcelorMittal Electrical Steel Co., Ltd.—has a registered capital of 2.6 billion RMB, with each party retaining 50% of the shares. The partners will invest an estimated at 6.5 billion RMB to install cold rolling and processing facilities for the new facility, which targets an annual production of 400,000 tonnes of non-grain-oriented and 200,000 tonnes of grain oriented electrical steel.
 
“Currently oriented steel and high-grade non-oriented steel production in China is limited to a few large leading steelmakers,” said ZHENG Baiping, General Manager of Valin Liangang. “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.”
 
ArcelorMittal also will provide its latest grain-oriented and non-grain-oriented technologies to the joint venture. 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.
 
Valin Lian’gang, a subsidiary of Valin Steel Tube & Wire, has signed a supply agreement with the new joint venture, as well as a Technology License Agreement with ArcelorMittal for the transfer of NGO and GO upstream technologies. The technology license agreement will allow Valin Liangang to supply high-quality hot-rolled substrate needed by the joint venture.
 
“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,” commented LI Xiaowei, Valin Group’s Chairman. “Electrical steel is the latest addition, following high-end heavy plate and automotive steel products.”
 
Gonzalo Urquijo, member of ArcelorMittal’s Group Management Board stated: “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. It is a significant step forward in ArcelorMittal’s strategy for supplying the market worldwide with high quality electrical steels. ArcelorMittal has recently decided expansions in its European and Brazilian operations and considers this market as strategic considering the strong demand linked to the increasing need for electricity distribution and consumption in performing applications.”
 
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 on sound capital and assets.
 
Over the past 7 years, Valin Group has achieved coordinated leap-frog development through innovation, capital operation and optimized restructuring, aiming to become larger and stronger. In 2007, Valin Group witnessed sales revenue RMB 50.3 billion, 38% higher year-on-year.
 
Hunan Valin Steel Co., Ltd is a public company that mainly produces cold and hot rolled super-thin coils, heavy plates, seamless pipes with a wide range of diameters, fine wire rods, etc. Equipped with state-of-the-art production lines in plate, tube and wire, Valin Steel’s products enjoy world-class technology and quality, and cater to various market segments in more than ten countries and regions, including U.S., Singapore, Korea, Australia, Middle East, south Europe, and Malaysia. Valin Steel produced 11.12 million tonnes of steel products in 2007, and is now China’s 10th largest steel company.
 
ArcelorMittal is the world's largest steel company, with over 320,000 employees in more than 60 countries. The company leads a number of major global steel markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks. With an industrial presence in over 20 countries spanning four continents, the company covers key steel markets, from emerging to mature.
 
Through its core values of sustainability, quality and leadership, ArcelorMittal commits to operating in a responsible way with respect to the health, safety and wellbeing of its employees, contractors and the communities in which it operates. It is also committed to the sustainable management of the environment and of finite resources. The company also takes a leading role in the industry's efforts to develop breakthrough steelmaking technologies and is actively researching and developing steel-based technologies and solutions that contribute to combating climate change.
 
In 2007, ArcelorMittal had revenues of USD 105.2 billion and crude steel production of 116 million tonnes, representing around 10% of world steel output.