ArcelorMittal SA, the world's largest steel and mining company, hopes to help China's auto industry ease its reliance on imported high-end steel through a 5.2 billion yuan ($842.16 million) joint venture with Hunan Valin Steel Co Ltd.
The Luxembourg-based company and China's sixth-biggest steel maker announced the joint venture, known as VAMA, this week, adding that the first batch of steel will roll out of its production line in Loudi, Hunan province, in June 2014.
VAMA will produce steel for high-end applications in the automobile industry.
"The annual production capacity in the first phase will reach 1.5 million tons next year, including 800,000 tons of cold-rolled coils, 200,000 tons of aluminum coils, and 500,000 tons of hot-dip galvanized coils, and will then increase to 2 million tons in the near future," said Sanjay Sharma, the joint venture's chief executive officer.
The production will be China-focused. VAMA will supply international automakers and first-tier suppliers as well as domestic car manufacturers and their supplier networks.
"VAMA will try to foster partnerships with ArcelorMittal's major accounts present in China, such as Volkswagen, General Motors, Ford, PSA, Mercedes-Benz, BMW, Toyota, Honda, and so on, as well as with the large domestic manufacturers such as Geely, Chery, Dongfeng, Guangzhou Auto, SAIC and Chang'an," said Sharma.
He added that the output will greatly help to lower imports in the country's high-end steel segment.
According to Wang Jun, the joint venture's chairman, China now imports about 2 million tons of steel for the auto industry annually.
"The local products will have the same quality as imported steel and can also help our customers to improve their efficiency due to the shorter waiting periods as well as reduce logistics costs," said Sharma.
"VAMA is committed to lead the development of China's automotive steel industry in close partnership with automotive manufacturers, while providing safer and more eco-friendly advanced automotive steel, which also meets the sustainable development requirements of China's automotive industry," added Wang.
Sharma told China Daily that without this joint venture, ArcelorMittal would only be able to provide about 200,000 tons of steel to automakers in China every year.
"The VAMA joint venture marks a big jump of our business in China," Sharma said.
China's auto industry consumes 15 million tons of steel every year, which is mainly provided by mid- and low-end domestic players.
"As China's automobile market is rapidly moving from low-end to high-end, the potential is huge for us leading suppliers," said Sharma.
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