Nippon Steel has announced the dissolution of its joint venture with China’s Baoshan Iron & Steel, concluding two decades of collaboration as their existing shareholders’ agreement expires at the end of August. Nippon Steel will transfer its 50% stake in the joint venture to Baoshan for approximately 1.8 billion yuan ($247 million).
The joint venture, established in 2004, was primarily focused on producing and selling cold-rolled and hot-dip galvanized steel sheets for the automotive sector in China. While Nippon Steel did not specify the reasons for ending the partnership, reports indicate a strategic shift towards markets in the U.S. and India.
Following the dissolution, Nippon Steel’s production capacity in China will decrease by 70%, although it will maintain around 1 million metric tonnes per year through its collaboration with Wuhan Iron and Steel, another subsidiary of the China Baowu Steel Group.
In a statement to Reuters, Nippon Steel clarified that the decision to dissolve the joint venture was unrelated to its ongoing bid for U.S. Steel, which has attracted scrutiny from U.S. authorities regarding the company’s assets in China. The discussions about the joint venture’s future have been ongoing since September 2022, while the U.S. Steel acquisition was announced in December 2023.
Additionally, Nippon Steel recently hired former U.S. Secretary of State Mike Pompeo to assist with the U.S. Steel acquisition process. Pompeo is currently visiting Japan, although Nippon Steel stated that his involvement is not connected to the company’s decisions regarding its operations in China.