Arcelor, Bao Steel and Nippon Steel Corporation Create Chinese Joint-Venture for Automotive Steel Production
LUXEMBOURG--Dec. 2, 20033, 2003--| Arcelor (Paris Exchange:CELR.PA)(SICOVAM:5786) |
Arcelor, Nippon Steel Corporation and Bao Steel have signed today an agreement for the creation of an industrial and commercial joint-venture. This operation will have an annual production capacity of 1.7 million tonnes of flat carbon steel, mainly for automotive applications. The new activity will be located in Shanghai next to Bao Steel upstream production facilities. It will comprise cold rolling and galvanizing operations.
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 new joint-venture with our partners Bao Steel and Nippon Steel is a strategic move to accompany our global automotive customers and to seize the tremendous growth opportunities offered by the Chinese market," said Arcelor Chief Executive Officer Guy Dolle.
According to the joint-venture agreement, Arcelor will take a 12 percent equity share in the new company, Nippon Steel Corporation taking 38 percent and Bao Steel taking 50 percent of the new company.
The joint-venture company, combining secure access to intermediate goods from Bao Steel and Nippon Steel as well as leading edge technology for automotive steels from Nippon Steel and Arcelor, will be able to offer breakthrough technological advantages to auto manufacturers operating in China.
The new facilities, budgeted at USD 800 million, will begin supply to customers as of the second quarter 2005. Products will include cold rolled steel, galvannealed steel and pure zinc galvanized steel. The two galvanizing lines will have a combined capacity of 800 000 tonnes per year.
Arcelor is the world's largest producer of flat steel for automotive applications with a global sales of 9 million tons per year. Arcelor has a very strong presence in Europe, where one car out of two is made with its steel.
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. As a consequence, the company is able to support its customers in North and South America as well as in Asia.
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 packaging and expanded it earlier this year through the creation of a joint-venture for the production of tailor welded blanks in Shanghai.
With more than 100,000 employees in over 60 countries, Arcelor is the world's largest steel producer. In 2002, on a pro forma basis, production was approximately 44 million tons of steel with a turnover of 26.6 billion euros. Arcelor is a major player in all its main markets: automotive, construction, household appliances and packaging as well as general industry.
This press release contains certain forward looking statements regarding anticipated market evolution and the future prospects of Arcelor. While these statements are based on the Company's best estimations as of the date hereof, actual results will vary as a function of market conditions, the action of competitors, consumer demand, steel prices, economic conditions and other factors.