[Image courtesy of www.arcelormittal.com ]
CBI member ArcelorMittal and China-based Valin Group announced that ArcelorMittal will increase its shareholding in Valin ArcelorMittal Automotive (VAMA), their downstream automotive steel joint venture, from 33% to 49%.
VAMA is focused on establishing itself as a premier supplier of high-strength steels and value-added products for China's fast-growing automotive market.
In line with the new shareholding agreement, Valin and ArcelorMittal will increase their planned capacity by 25% from 1.2 million tonnes to 1.5 million tonnes. Capital investment will also increase by 15% to RMB 5.2 billion, and VAMA signed purchase agreements totaling RMB 1.8 billion for key equipment, including cold rolling facilities, continuous annealing, and galvanising lines.
In addition, ArcelorMittal could potentially recalibrate its share-holding in Hunan Valin Steel. The two companies finalised a share swap agreement based upon a Put Option mechanism, which enables ArcelMittal to exercise the Put Options granted by Valin Group over the next two years. Under the arrangement, ArcelorMittal could sell up to 19.9% of the equity it holds in Hunan Valin Steel, 600 million shares, to Valin Group.
The exercise period of the Put Options is equally spaced with a gap of six months and linked to the key development milestones of VAMA. Following the exercise of the Put Options, ArcelorMittal would retain a 10.07% shareholding in Valin Steel as a long-term strategic cooperation.
Sudhir Maheshwari, ArcelorMittal's Group Management Board member responsible for China, said, "We have agreed with Valin Group to recalibrate our shareholdings in Valin Steel to focus on China's fast-growing automotive steel market. This is a natural evolution since ArcelorMittal already enjoys a leadership position in the automotive markets of Europe and North America. VAMA will be based on our proven market leading technology. We believe this is a good opportunity to create value for our shareholders and further enhance our participation in both China and the automotive market more broadly."
Please click here to read the full press release by ArcelorMittal.