Aug 30 2004
Arcelor, Nippon Steel Corporation and Baoshan Iron & Steel Co., have officially launched today the industrial and commercial joint-venture on which the three companies had agreed on December 23, 2003. At the occasion of the first board meeting of the new company called Baosteel-NSC/Arcelor Automotive Steel Sheets Co., Ltd., the CEOs of the three founding companies gathered in Shanghai for an official ceremony.
"This joint-venture with our partners Bao Steel and Nippon Steel is a strategic move to better serve the Chinese market and our global automotive clients active in this part of the world. It will help us to seize the tremendous growth opportunities offered by the Chinese market by offering high value added products. We are pleased by the cooperation we enjoy with our partners and the good progress of the construction and engineering work that is well on schedule," said Arcelor Chief Executive Officer Guy Dollé in Shanghai. "This joint-venture offers a model for the future configuration of the global steel industry," Dollé added.
The operation will have an annual production capacity of 1.7 million tonnes of flat carbon steel, of which 900 000 tons of cold rolled steel and 800 000 tons of dip zinc-galvanized sheet. The new activity will be located in Shanghai next to Bao Steel's upstream production facilities. Products will include cold rolled steel, galvannealed steel and pure zinc galvanized steel, including Arcelor's proprietary product for automotive applications, Extragal%u2122.
The plant will feature two continuous dip zinc-galvanizing units, one mainly dedicated to automotive products and another mainly for the production of sheet for domestic appliances. The joint-stock company was established on 28 July 2004 with the approval of the Chinese State Commerce Ministry. The total investment in Baosteel-NSC/Arcelor Automotive Steel Sheets Co., Ltd. is 6.5 billion RMB Yuan, (EUR 650 million) and the registered capital is 3 billion RMB Yuan (EUR 300 million). The contractual duration of the joint venture is 20 years. Bao Steel owns 50 percent of the new company, with its foreign partners Arcelor and Nippon Steel controlling the other 50 percent. Nippon Steel Corporation, which holds a.38 percent equity share in the new company, and Arcelor, which holds 12 percent, made contributions in cash. The contribution of Baoshan Iron & Steel Co. was made in kind.
The joint-venture company combines secure access to intermediate goods from Bao Steel and Nippon Steel as well as leading edge technology for automotive steels from Arcelor and Nippon Steel. It will be able to offer breakthrough technological advantages to auto manufacturers operating in China.
The new joint-venture fits in the context of the global strategic alliance between Arcelor and Nippon Steel Corporation. This alliance allows both companies to serve their global customers, for instance in the automotive industry, thanks to the development and supply of leading edge steel solutions across the world. Joint R&D activities and cross-licensing of technologies are key tools at the disposal of the alliance.
This joint-venture represents a significant move in line with Arcelor's global strategy of global partnerships with the automotive industry. In order to serve its large automotive customers operating globally, Arcelor has developed strategic partnerships, joint-ventures and licensing agreements strengthening its global reach. Bao Steel is an important partner for Arcelor. The two companies have initiated their cooperation through a joint-venture (initially between Bao Steel and Usinor) in the production of steel for packaging applications and expanded it in 2003 through the creation of a joint-venture for the production of tailor welded blanks for automotive applications in Shanghai.
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