Chinese steelmaker Shougang Group, considered Beijing's largest polluter, is in talks to buy 15% of a car making joint venture involving Hyundai Motor, the Daily Deal said.

The purchase, for RMB500 million ($US60 million), is part of Shougang's effort to cut its overall pollution in the face of mounting political pressure ahead of the 2008 Summer Olympics to be hosted in the capital. Beijing's municipal government controls Shougang.

The seller is the Beijing city-owned Beijing Automotive Industry Holding Co., which owns 50% of the venture, Beijing Hyundai Motor Co. Hyundai owns the other half and would be the largest shareholder if the deal closes.

The acquisition is part of Shougang's strategy to migrate from low-end steel production to cleaner industries as diverse as the manufacture of semiconductors, CD-ROMs and, now, car manufacturing.

Shougang, one of the top five Chinese steel makers, has a listed subsidiary on Shenzhen Stock Exchange, Beijing Shougang Co. The venture, Beijing Hyundai Motor Co., involved a $300 million investment and was launched in October 2002. It expects to produce 50,000 cars this year.