Baotou Iron and Steel Group has ended talks with Arcelor Mittal about selling a stake to the world's largest steelmaker, Baotou Chairman Lin Donglu said yesterday.
"We are not talking about any actual cooperation anymore," Lin told reporters.
China's steel industry regulations bar overseas steelmakers from taking a controlling stake in a joint venture.
"Because Arcelor Mittal wants to take a stake of 50 percent 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.
Baotou Steel is also mulling over a listing plan in Hong Kong. "We hope to float shares on the Hong Kong bourse as soon as possible, probably within this year," Lin said.
Arcelor Mittal is showing growing interest in China, the largest maker and user of steel. The company will raise its stake in Hunan Valin Steel Tube & Wire Co when the Chinese steelmaker issues new shares.
Arcelor Mittal, which holds a 29.5 percent stake in Hunan Valin, will take 49.3 percent of the 520 million new shares on offer, boosting its holding to 33.3 percent, according to Bloomberg.
Hunan Valin will use the 2.3 billion yuan raised from the share sale for growth, the company said yesterday.
Shares of Hunan Valin, which last closed at 5.54 yuan in Shenzhen on January 31, have been priced at 4.47 yuan.
Sridhar Krishnamoorthy, China manager for Arcelor Mittal, said the share placement would raise funds to help Hunan Valin increase its stake in its subsidiaries.
Hunan Valin made a profit of 547.2 million yuan in 2005 and expects its 2006 profit to rise by 50 to 100 percent as the company shifts to higher-grade production and lowers its costs.
(China Daily March 7, 2007)