Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Nippon Steel will dissolve its joint venture with China’s Baoshan Iron & Steel, it said on Tuesday, ending two decades of cooperation when their existing shareholders’ agreement expires at the end of August.
Nippon Steel will transfer its 50% stake in the joint venture to Baoshan, it said. In a separate statement Baoshan said it had agreed to pay about 1.8 billion yuan ($247 million) for the holding.
The joint venture was producing and selling cold-rolled steel sheets and hot-dip galvanized steel sheets for automotive use in China. Nippon Steel did not provide a reason for dissolving the partnership originally established in 2004.
The Nikkei business daily, which first reported the news, said the company had decided to shift its attention to the US and India.
The company’s production capacity in China will be cut by 70%, but it will still keep around 1 million metric tonnes per year thanks to its joint business with Wuhan Iron and Steel, another unit of the China Baowu Steel Group, Nikkei said.
Nippon Steel said in a statement to Reuters the decision was not linked to its bid for US Steel, which has led to some US scrutiny of the Japanese company’s assets in China.
“Consultations on this matter have been held since September 2022,” Nippon Steel said. The company announced the deal to buy US Steel in December 2023.
Nippon Steel said last week it had hired former US Secretary of State Mike Pompeo to help with its effort to close the US Steel acquisition. Pompeo is visiting Japan this week, according to local media reports.
In the statement to Reuters, Nippon Steel said Pompeo had no connection to its decision on its China operations. It declined to comment on details of his trip to Japan.
($1 = 7.2741 Chinese yuan renminbi)
(By Katya Golubkova, Amy Lv and Satoshi Sugiyama; Editing by Jamie Freed, Varun H K, Miral Fahmy and Jan Harvey)
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