Arcelor finalizes Laiwu stake purchase

SteelOrbis Shanghai Luxembourg based Arcelor has received Chinese government's approval and finalized its stake purchase from Shandong province based Laiwu Steel. To become the second largest shareholder of Laiwu Iron and Steel Company, Arcelor will pay RMB 1.8 billion ($224 million) for 30 million shares, which constitute 32.53 percent of Laiwu Iron and Steel Company. At present, as the largest shareholder of Laiwu Iron and Steel Company, Laiwu Group holds 76.82 percent of the total shares in the steelmaker. After Arcelor's purchase, Laiwu Group will keep 44.29 percent of the steelmaker. Arcelor is paying a better price for the purchase compared to Mittal's share purchase from Valin in Hunan province. Mittal spent $9.22 million for each 1 percent of Valin while Arcelor spends $6.88 million for each 1 percent of Laiwu Steel. However, Valin is not as competitive as Laiwu Iron and Steel Company. In 2005, Laiwu Steel's crude steel output was 10.34 million metric tons and that of finished steel was 7.77 million metric tons. Valin's 2005 crude steel output was 8.45 million metric tons and finished steel output was 7.84 million metric tons. Furthermore, Laiwu Steel consists of one large mill, while Valin has three steel mills located in three different regions of Hunan Province.