Chinese steel giant Baoshan Iron & Steel (Baosteel) has acquired the full stake in a joint venture automotive steel production plant it originally established with Japan’s Nippon Steel in 2004.
The joint venture agreement was set to expire on July 30, but instead of extending the partnership, Baosteel chose to acquire Nippon Steel’s 50% stake for $242 million. Initially, Baosteel held a 50% stake in the venture, while Nippon Steel owned 38%, and Arcelor, a subsidiary of ArcelorMittal based in Western Europe, held the remaining 12%. Nippon Steel later bought Arcelor’s share, increasing its stake to 50%.
The two companies had joined forces to produce automotive steel for the rapidly growing Chinese automotive market, supplying Japanese automakers operating in China. However, as the automotive industry has rapidly shifted towards electric vehicles, Japanese car manufacturers have encountered sales difficulties, prompting Nippon Steel to exit the joint venture.
Although the separation seemed smooth on the surface, there are signs of underlying tensions between the two companies. Recently, the Nikkei reported that Nippon Steel is planning to sue Baosteel for patent infringement.
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