London, May 5: ArcelorMittal, the world’s biggest steel producer, is keen to have a 25 percent stake in China’s second largest steel firm, Angang Steel, in an effort to extend its presence in that country.

Lakshmi Mittal, the main owner of ArcelorMittal, is said to have made this proposal to Zhang Xiaogang, Angang’s chairman, in a private meeting just over two months ago.

Although financial terms were not discussed, a 25 per cent stake in Angang would cost ArcelorMittal at least five billion dollars, according to Angang’s current market valuation, reports The Financial Times.

According to the paper, Zhang turned down Mittal’s suggestion of a 20-30 per cent stake in the government-controlled company, but expressed that he would be keen in principle to allow the Luxembourg-based company a much smaller shareholding in Angang of one to two percent.

He also was open to the suggestion of co-operating with ArcelorMittal, for instance in new steel making or mining projects.

Mittal confirmed that he has had an informal discussion with Zhang about various possibilities.

Angang is listed on the Hong Kong stock exchange, with a controlling shareholding of 67 per cent owned by Anshan Iron and Steel, a Chinese government company.

Last year, Angang produced 16m tonnes of steel, putting it in second place behind Baosteel, the industry leader in China with an output of nearly 30m tonnes annually.

Mittal’s overture is part of his long-term effort to become a large force in the Chinese steel industry.

Beijing has a general policy of not allowing majority ownership of steel companies by non-Chinese businesses.

ArcelorMittal currently has a 32 per cent stake in Hunan Valin Tube Steel and Wire, a leading Chinese steel maker. It also is poised to take control of China Oriental, another China-based steel company, through a series of stock market transactions.

Last year ArcelorMittal accounted for 13 per cent of world steel production outside China, but only 0.7 per cent of steel production from China. (ANI)