Lakshmi Mittal is eager to expand the firm's foothold in China

Arcelor Mittal already owns 28% of the firm and is eager to increase its exposure to China, the world's biggest producer and consumer of steel.

China Oriental offers a rare opportunity in a sector still closely monitored by the state, analysts said.

Mittal bought Arcelor in 2006, creating a firm with 10% of the steel market.

Foothold in China

Arcelor Mittal bought its 28% stake in China Oriental last month.

On Thursday, the Hong Kong Securities and Futures Commission said that Arcelor Mittal had acted in concert with the chair of China Oriental when it bought this stake.

Under the commission's listing rules, the steel giant must now make a general offer for the firm.

The global market for steel has been growing, with especially strong demand from developing countries such as China as they embark on large industrial and building works.

"We have made no secret of our wish to participate more actively in China's fast-growing steel market," company president Lakshmi Mittal said in a statement.

"Not only will this strengthen our position in China, it will also provide the China Oriental Group with the expertise and experience it needs to become a leading producer of heavy sections in China," he added.

Foreign investors are not allowed to own more than 50% of major steel mills in China.

Non-state owned, foreign-registered China Oriental, though a small player, offers Arcelor Mittal a rare chance of access to the market, analysts said.

"China Oriental is tiny for Arcelor Mittal," said Helen Lau, an analyst at Daiwa Institute of Research.