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Nippon Steel to buy Arcelormittal’s stake in China venture

Nippon Steel Corporation, Japan’s largest steelmaker, agreed to buy ArcelorMittal (MT)’s 12 percent stake in an automotive-steel venture in China as demand for cars rises in the world’s largest market.

The Japanese steelmaker will increase its stake in Baosteel-NSC/Arcelor (BNA) Automotive Co. to 50 percent from 38 percent, Masato Suzuki, a spokesman for Tokyo-based Nippon Steel said, without giving the value of the deal. Baoshan Iron & Steel Corp. will retain the remaining 50 percent in the venture. The deal will need approval from Chinese authorities, he said.

Total vehicle deliveries in China will grow about 5 percent this year after surging 32 percent to a record in 2010, according to China Association of Automobile Manufacturers. Baosteel-NSC/Arcelor, which started production in 2005, has a capacity of 2.2 million tons a year.

“We’ve concluded to buy the stake as we expect stable return from the venture, judging from a further growth in the Chinese auto market,” Suzuki said.

Nippon Steel signed the agreement to buy the stake on June 27, the company said in a statement.

Nippon Steel Corporation is the world’s 4th largest steel producer by volume. In early 2011, Nippon Steel announced plans to merge with Sumitomo Metal Industries. With Nippon Steel producing26.5 million tons of steel per year and Sumitomo making 11 million tons, the merged entity would produce close to 37 million tons of crude steel per year. This volume of steel output would make Nippon Steel the second largest steelmaker in the world. As of March 31, 2010, the number of persons employed by the company was 15,845. In FY 2010, Nippon Steel Corporation posted net sales of $44378.6million and ordinary profit $150.6 million.

ArcelorMittal is the world’s leading steel company, with operations in more than 60 countries. ArcelorMittal is the leader in all 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. In 2010, ArcelorMittal had revenues of $78.0 billion and crude steel production of 90.6 million tons, representing approximately 8 per cent of world steel output.

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