Posted on 14 Nov 2024
ArcelorMittal and China Oriental Group have announced a joint venture targeting the growth of electrical steel production, a move set to strengthen their foothold in the burgeoning sector.
The JV will see both firms hold a 50% equity share and is expected to be formalised in the first half of 2025 following regulatory clearance by Beijing authorities last week, Kallanish notes.
ArcelorMittal currently holds approximately 37% of China Oriental Group, which is listed on the Hong Kong Stock Exchange.
Under the partnership, ArcelorMittal and China Oriental have signed agreements to develop both upstream and downstream electrical steel production operations. The upstream venture will see an investment of $660 million to construct a hot-rolled flat non-oriented electrical steel production line in China, anticipated to commence production within 18 months.
Initial capacity is projected at 2.5 million tonnes/year, with an expansion to 3.5m t/y in a second phase. Raw material supply for this line will be supported by Hebei Jinxi Steel, a China Oriental subsidiary.
To facilitate the project, the companies have secured support from the Qianxi County Government in Tangshan City, Hebei Province, which will provide production sites and other resources.
Additionally, ArcelorMittal plans to spearhead green power projects for the JV to ensure sustainable energy supply.
The downstream agreement focuses on producing soft magnetic materials tailored to the new energy market, with a total investment of $2 billion. The Changzhou Municipal Government in Jiangsu Province is collaborating on the project, offering land and support to streamline development.
Once operational, this facility will serve multiple sectors, including automotive, industrial motors, home appliances, and power generation, with production expected to begin within 26 months. Initial output is estimated at 1.5m t/y, with potential for a second-phase increase to 1.8m t/y.
According to the Beijing Municipal Administration for Market Regulation, the JV's projects could capture between 5% and 10% of China's hot-rolled flat non-oriented electrical steel market, while non-oriented electrical steel products are forecasted to hold less than 5% market share based on 2023 figures.
Source:Kallanish
