TOKYO (AP) - Nippon Steel Corp. and Europe's ArcelorMittal said Friday they had signed a memorandum of understanding to form a global alliance and to expand upon existing joint ventures in North America.
Japan's biggest steelmaker said in a statement on its Web site that the two companies are studying expansion of their automotive sheet steel business in North America. Also, the previous alliance between Nippon Steel and Arcelor will be replaced with an alliance between Nippon and ArcelorMittal, Nippon Steel said.
ArcelorMittal confirmed the agreement in a separate release. It said the two companies have been working on defining a global strategic alliance since the formation of ArcelorMittal in July 2006.
Mittal Steel Co. NV acquired Luxembourg's Arcelor SA last year in a hostile takeover worth around $41 billion. The deal has had a rocky road to completion because of regulatory holdups, but Mittal said in late June it expected the first step of its takeover to be complete in September.
When the deal closes, ArcelorMittal will become the world's largest steelmaker with 10 percent of global production.
Lakshmi Mittal, chief executive of ArcelorMittal, and John Surma, chief executive of United States Steel Corp., said Thursday in a joint interview with The Associated Press that they see more consolidation ahead in the steel business, particularly within China's fragmented and fast-growing industry.
However, Mittal, whose holdings include the former Weirton Steel mill in West Virginia, said the role of foreign investors in China's steel industry remains uncertain. He said his company holds the lone steel partnership with a Chinese producer, but its two-year effort to buy China's Laiwu Steel has to date been blocked.
Nippon Steel is also considering expanding joint ventures with ArcelorMittal in China in addition to expanding their North American ventures, a company spokesman told Dow Jones Newswires Friday, but he declined to give further details.