Beijing slows down ArcelorMittal's ambitions
Issued on: Modified:
Steel giant ArcelorMittal didn't get China's approval to take over China Oriental, one of the most important steel producers in the country. It's the second time Beijing has thwarted Lakshmi Mittal's ambitions for the Chinese market.
China Oriental said Monday a takeover of the firm by ArcelorMittal had stalled after Chinese regulators failed to give the green light to the proposed deal in the strategically key steel sector.
China's anti-trust regulator failed to approve the deal for ArcelorMittal to take a stake of more than 70 percent in Oriental before a May 9 deadline, and the bid had been put on hold, a spokesman for the firm said.
ArcelorMittal chairman Lakshmi Mittal told the Financial Times that the Chinese government did not want a foreign steelmaker controlling a leading domestic steel firm, adding he would have to settle for a 30 percent stake.
"We may have to accept less than we wanted," the Indian billionaire and majority shareholder in ArcelorMittal, the world's biggest steel producer, was quoted as saying in the report.
"If this happens, I will be disappointed. But a stake in the company of 30 percent or so still is very useful for us," he told the newspaper.
The development could be seen as a set back for his push into China, the world's biggest steel market, but the Chinese firm's spokesman said there had been no talk yet on ditching the move for a higher stake.
"We understand they are disappointed because they had been awaiting for the approval but did not obtain it within the time of period they expected," the China Oriental spokesman said.
"But China Oriental and ArcelorMittal have so far never talked about giving up raising the stake," he said.
Oriental's main production plant is in northern Hebei province, one of the richest sources of iron ore in China. ArcelorMittal already holds minority stakes in two Chinese steel companies.
ArcelorMittal and Oriental announced in December that they had agreed to the Luxembourg-based steel company buying a 73.13 percent stake in the Hong Kong-listed steel maker in a deal valued at one billion dollars.
The Chinese Ministry of Commerce and the State Administration for Industry and Commerce had six months to approve the transaction, but the deadline passed without a ruling.
China sees its steel industry as a key strategic sector, and the government has yet to allow any foreign owner to take control of a large domestic producer.
Analysts say the government wants to see consolidation among the country's hundreds of steel mills so they can compete better internationally.
Daily newsletterReceive essential international news every morningSubscribe