Arcelor Mittal July 26 -- Hunan Valin Steel (000932) was ordered by the Hunan bureau of the China Securities Regulatory Commission to undergo a “rectification” after its cooperation with Arcelor Mittal caused it to lose 857 million yuan in 2010, reports China Securities Journal.

 In June 2008, Valin and its parent group jointly signed a contract with Arcelor Mittal to form an automobile steel sheet joint venture, and the latter committed to provide the technologies for it.

Valin’s subsidiary, Lianyuan Steel, signed on to supply raw sheets, and later in August that year, its parent group signed another contract with Arcelor Mittal to establish an electrical steel joint venture, which signed a purchase agreement with Lianyuan Steel also for 600,000 tons of raw sheet metal per year. Arcelor Mittal then signed a technology license contract with Lianyuan to provide hot-rolling technologies of high-grade oriented silicon steel and non-oriented silicon steel to Lianyuan.

However, Arcelor Mittal failed to execute its commitments through the end of 2009 when Lianyuan’s 2250 hot-rolling line built for the cooperation was completed. The hot-rolling line then failed to produce high-grade, high-value-added hot-rolled steel sheets without AM’s technical support and lost 857 million yuan in 2010. Also, Arcelor Mittal committed to cover Valin’s global purchase plan and finally failed to execute it again, resulting in 780 million yuan in extra purchasing costs for Valin.