Calcutta, July 13: Nippon Steel Corporation, Japan’s largest steel maker, has signed a memorandum of understanding with world leader ArcelorMittal for a global alliance.
Under the deal, both companies will work towards strengthening their automotive steel sheet businesses, especially in North America.
“Nippon Steel and ArcelorMittal today executed a non-binding MoU on matters, including their global strategic alliance and joint business activities in North America. The companies have discussed the issues since the creation of ArcelorMittal in July 2006,” a Nippon Steel statement said.
ArcelorMittal confirmed the agreement in a separate release. It said the two companies had been working on a global strategic alliance since the formation of ArcelorMittal.
Nippon Steel, which is the world’s second-largest steel company with a capacity of 34 million tonnes, said the companies were exploring expansion plans and would enter into definitive agreements as soon as they came up with a plan for the automotive steel sheet sector in North America.
Arcelor had an agreement with Nippon Steel before it was acquired by Lakshmi Niwas Mittal.
It was decided today to upgrade the previous alliance to a new deal between Nippon Steel and ArcelorMittal, the Japanese company said.
Under the new agreement, the Japanese steelmaker will supply technology to ArcelorMittal for products to be used at the European plants of Japanese automakers, the Nikkei business daily reported without naming its sources.
ArcelorMittal will provide technology to the Japanese group for use in the Asian facilities of European carmakers, the report said.
Nippon Steel, however, declined to confirm reports that the two had agreed to supply steel sheets to each other for automobile companies in Asia and Europe.
So far, Japanese companies have not participated in the global consolidation game that Mittal Steel NV’s $41-billion hostile takeover of Luxembourg’s Arcelor SA sparked off last year within the highly fragmented global steel industry.
More steel companies got interested after Tata Steel bought Corus, taking the Indian company to the sixth position globally in terms of size.
When the deal between Arcelor and Mittal closes, ArcelorMittal will have a 10 per cent share in global steel output. But clearly, Lakshmi Mittal is not resting on his laurels.
He is in discussion with South Korea’s Posco for co-operation in various sectors.