No foreign controlling stakes in steel firms
China, the world's No 1 steel manufacturer and consumer, is expected to change the rules governing foreign investment in its fast-growing steel sector.
The nation will forbid foreign steel producers from taking controlling stakes in domestic steel companies, Qi Xiangdong, deputy secretary general of China Iron and Steel Association, said yesterday.
These restrictions will be included in a national steel industry policy, which is to be released next week, he said.
They come as foreign steel giants are speeding up mergers and acquisitions (M&As) in China's steel industry, and even seeking majority stakes in domestic steel mills.
Mittal, the world's biggest steel group, will buy a 36.67 per cent stake in Valin Iron and Steel Co Ltd - a Shanghai-listed steel maker in Central China's Hunan Province, the Chinese company said last month.
The figure will be less than it previously intended.
In January, Mittal and Valin's State-owned parent agreed to each having a 37.17 per cent stake in the Shanghai-listed firm.
Arcelor, the world's No 2 steel company, has also been seeking a controlling stake in Laiwu Iron and Steel Co Ltd - a Shanghai-listed steel maker in East China's Shandong Province.
Both Valin and Laiwu are among China's top 20 steel makers.
Analysts said the expected steel policy indicates that the Chinese Government is unwilling to see foreign steel giants control the steel sector.
"The steel sector is one of backbones of China's steadily-growing economy.
Therefore, it should not be controlled by foreigners ," said Tian Shuhua from
China Galaxy Securities Co Ltd.