Nippon Steel, Arcelor Mittal Agree to Keep Alliance

Nippon Steel announced on Friday the firm and Arcelor Mittal signed nonbinding memorandum of understanding to keep the strategic alliance. They reached basic agreement that Arcelor Mittal assumes rights and obligations of Arcelor under alliance with Nippon Steel. They keep discussing for final contract. They also agreed to keep discussing for expansion of automotive flat steel production at joint venture in North America. Nippon Steel tries to keep and expand the global supply system of high valued flat steel to worldwide transplants of Japanese automakers through the joint operations and partnership with Arcelor Mittal in Europe, North America and China. After Mittal Steel acquired Arcelor in July 2006, Nippon Steel has negotiated with combined Arcelor Mittal to keep the alliance with the combined firm and to modify some of the conditions for alliances with Arcelor and Mittal Steel. Nippon Steel tries to make some arrangement to meet the strategy for the alliance based on global alliance with Arcelor and North American joint venture with Mittal Steel. Nippon Steel agreed with Arcelor Mittal to keep seeking global business opportunity to meet worldwide growing demand from automakers through the partnership based on global alliance with Arcelor through 2011. They keep discussing for definitive agreement. Nippon Steel succeeded to keep the partnership and so far to avoid hostility. The firm keeps the cross license and joint development in Europe as with Arcelor. Nippon Steel can supply high valued flat steel stably through Arcelor Mittal to European transplants of Japanese automakers. Nippon Steel keeps supplying automotive flat steel through cold rolling joint venture, I/N Tek and galvanizing joint venture, I/N Kote to Japanese automakers’ North American operations. They study to expand the continuous galvanizing line with 500,000 short ton of annual output capacity. They could build new line at existing site in Indiana or new site in southern part of USA, in which the users expand the operations. They and Baosteel Group already agreed to keep the joint venture structure for Baosteel-NSC/Arcelor Automotive, which has cold rolling and galvanizing lines. They study to add a line with 450,000 tonnes of annual output capacity to expand the automotive flat steel production.