Enter the Dragon: ArcelorMittal Opens Chinese Joint-Venture Steel Mill

by on

With the opening of its $832 million steel plant in China last Sunday, the world’s largest steelmaker, ArcelorMittal, is in the running to meet demand for advanced automotive steel in China and other parts of the world.

FREE Download: The Monthly MMI® Report – covering Steel/Iron Ore markets.

Built on a greenfield site in the economic zone in Loudi, Hunan province, ArcelorMittal’s first Chinese plant isthe first to be opened under its VAMA (Valin ArcelorMittal Automotive Steel Co., Ltd.) brand. VAMA will produce high-strength and cost-efficient lightweight automotive steel for the Chinese market. The new company is a joint venture partnership with Chinese company Hunan Valin Iron & Steel.

The new plant is likely to have an annual  production capacity of 1.5 million tons including 800,000 tons of cold rolled coil, 200,000 tons of aluminum-coated coil and 500,000 tons of hot-dip galvanized coil. Approved by China’s National Development and Reform Commission and the Ministry of Commerce, VAMA’s automotive steel products will include auto structural parts, chassis and wheels.

Non-resident Indian billionaire and CEO of ArcelorMittal, Lakshmi Mittal has already welcomed the much-anticipated removal of a near 10-year block on overseas takeovers in China’s steel industry. Mittal has reason to be proud. With his plant, ArcelorMittal becomes one of the few foreign steel mills with investments in China since the ban on overseas control was imposed in 2005. This is also sweet music to his ears because, as reported by MetalMiner China’s “flooding” of the global steel market was one of the reasons why prices had remained flat for so long, affecting the overall bottom lines of companies such as ArcelorMittal and Tata Steel.

The opening of VAMA’s first plant means ArcelorMittal will be playing in the backyard of the very dragon that once threatened to breathe fire on its future plans.

A report by news agency Bloomberg said China, the world’s top producer and consumer, is considering outright scrapping the near-decade old foreign-owned steel mill ban. This move could act as a catalyst for global mills to revive a push into China’s US $423 billion steel sector where demand is seven times higher than in the next biggest market, the United States of America.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.