(Yicai Global) Oct. 18 -- Baoshan Iron and Steel has denied infringing a Nippon Steel patent after the Japanese firm filed a lawsuit against the Chinese state-owned metals giant and carmaker Toyota Motor, Securities Times reported.

Baosteel has tried to contact Nippon Steel several times, seeking proof, but the plaintiff repeatedly refused, the report said today. The Shanghai-based company strictly abides by laws and regulations, including intellectual property laws, in doing business, it added.

Nippon Steel filed suit with the Tokyo District Court alleging that Baosteel and Toyota infringed its patent relating to non-oriented electrical steel sheets and seeking compensatory damages of JPY20 billion (USD175 million), the Tokyo-based steelmaker said in a statement on Oct. 14.

Toyota said the lawsuit was “very regrettable,” and did not find any patent infringement issues at Baosteel before signing a supply contract with the Chinese firm.

Non-oriented electrical steel sheet is a ‘high-functionality material’ with significantly enhanced magnetic properties widely used in daily life as iron cores for electric generators in power plants, electrical products, motor-driven vehicles, and vibration motors in mobile phones. There are two categories of electrical steel: low silicon and high silicon. New energy vehicles mainly use the high-silicon variety.

Electrical steel has been monopolized by global industrial powers for a long time due to the extremely high technical threshold, and China has achieved independent research and development and industrial breakthrough in the past 10 years, according to the research report of securities brokerage firm Zheshang Securities.

China produced almost 12 million tons of electrical steel last year, of which 9.4 million tons were non-oriented electrical steel, making it the world’s largest producer of the material.

Baosteel invested CNY2.7 billion (USD420 million) to build the world’s only professional production line of high-grade non-oriented silicon steel for the NEV industry, which will increase its annual production capacity to 1 million tons. Construction started last December, and it is scheduled to begin operation in March 2023. By then, the firm’s annual output of silicon steel products is expected to reach 4 million tons.

Editor: Futura Costaglione