Mittal buys stake in Chinese steel giant

Lakshmi Mittal, Britain's richest man and the owner of the world's largest steel company, is expanding his empire to the fast-growing Chinese market, taking a $314m (£168m) stake in one of the country's biggest producers.

Lakshmi Mittal, Britain's richest man and the owner of the world's largest steel company, is expanding his empire to the fast-growing Chinese market, taking a $314m (£168m) stake in one of the country's biggest producers.

Mittal Steel Company has offered to buy a 37.17 per cent stake in Hunan Valin Steel Tube & Wire. The Chinese company has an annual steel production capacity of 8.5 million tonnes and recorded profits of $85m on turnover of $1.94bn in the nine months to September 2004.

China is a hotbed of industrial activity, accounting for one-fifth of the world's steel output and a quarter of its consumption. This makes it an extremely attractive market for Western companies and a number are looking to invest there.

Mr Mittal, who took a £1.1bn dividend from Mittal last year, said: "Strategically this is a key acquisition for Mittal as it provides us with our first production platform in the world's fastest-growing steel market."

Steel output from China exceeded 260 million tonnes in 2004, up 17 per cent from 2003. It is expected to surpass 330 million tonnes this year. Mr Mittal said: "We are confident demand in China will remain strong and this acquisition is very much intended as a first step towards a more significant production presence in this country."

Valin should give Mittal access to the southern regions of China, which have yet to be dominated by Baosteel.