Arcelor, the world's second-largest iron and steel producer, which had planned to set up a 50-50 joint venture with Laiwu Iron & Steel Co Ltd to build a new iron and steel production base at Rizhao port in China’s eastern Shandong province seems doubtful

As per a report in a Chinese daily Mr Meng Lingjun, the deputy director of metallurgical department of the National Development and Reform Commission (NDRC) has told that the central government will disallow the proposed Arcelor takeover of a 50% stake in Laiwu Iron and Steel.

"Arcelor had put pressure on the central government to approve the buyout of Laiwu Steel, but the central government repeated that it would not give an exception to the European steel maker to break the newly-published Chinese steel industry policy," Mr Meng is reported to have said.

Mr Meng made the comments on the same day reports came out in the Chinese media that Arcelor reached the 50% share takeover agreement with Laiwu Steel, the listed arm of Shangdong Province's largest steel maker Laiwu Iron and Steel Group, to purchase a controlling piece of the company.

Mr Li Xinchuang, the vice president of the China Metallurgical Industry Planning and Research Institute, told press that Arcelor could take a detour around the government’s blockade and increase its shares step by step.

The central government has also denied Mittal Steel's purchase of 50% of Valin Pipe and Wire Valin, the listed subsidiary of Valin Iron and Steel Group, forcing Mittal to agree to decrease the stake and relinquish a controlling position. On September 21, Valin announced the government's final approval of Mittal's purchase of a stake in the company, after the two companies agreed to decrease the size of the deal.