World's largest steel conglomerate Mittal is to become the second largest stockholder of a steel company located in central China's Hunan Province with approval of China's National Development and Reform Commission (NDRC).

The NDRC approved the acquisition proposal on Thursday, immediately after the State-Owned Assets Administration Commission gave a green light to the deal.

Thursday's SDRC decision literally enables Mittal to purchase 36.673 percent of stocks from the Hunan-based Valin Iron and Steel Co. Ltd at a price of 2.7915 billion yuan (about 338 million US dollars). Valin will hold 37.673 percent of the joint venture's stock.

The state-owned Valin, listed on the Shenzhen Stock Exchange, will hand in 30 percent of its sales to Mittal to the central finance and use the rest money mainly to adjust and upgrade its product mix, said Valin sources.

The deal not only marks the largest foreign acquisition of China's A-share enterprises but also makes Valin the first Chinese steel company to be embedded in the network of a global iron and steel giant through stock trading.

According the arrangement made by the two sides, Mittal will provide support to Valin in fields such as technological development, management and marketing. The multinational group also vows to supply Valin with three million tons of iron ore in the first year after the joint venture is established and increase the amount subject to the latter's actual demands.

Valin produced 7.13 million tons of steel last year, with revenues worth of 26.2 billion yuan (about US$3.18 billion).

(Xinhua News Agency July 15, 2005)