The world's largest steel maker, Mittal, has made a long-term commitment to the huge steel market in China by setting up a research institute in central China's Hunan Province.

It has also closed a deal to buy a 36.8 percent stake in the Shenzhen-listed and Hunan-based Valin Steel Tube & Wire Co Ltd.

Mittal, which is based in the UK, said yesterday in Beijing that it acquired a stake in Valin for US$338 million. The Hunan-based steel firm will take the biggest stake, with 37.7 percent of the company.

The deal marks the first time a foreign company has taken a stake in a local Chinese steel firm.

Mittal is spending US$5 million to build the Mittal Research Institute for Metals at Central South University in Changsha, the capital city of Central China's Hunan Province.

"We hope to develop the Mittal Research Institute into a major R&D center in Asia for our group," Lakshmi Mittal, chairman and CEO of Mittal Steel, said in a company statement yesterday.

The company said yesterday that China is its most important market, and one with the greatest potential.

After the deal with Valin, the new board of Valin Tube and Wire is composed of 15 directors, comprising five each from Mittal and the Valin Group, and five independent directors.

Mittal will transfer six international advanced technologies, including hot aluminium and zinc coated steel plate, high quality wire and rod steel, and high-grade ship-use steel plate facilities to the Hunan-based steel firm.

(China Daily October 19, 2005)