Lakshmi Mittal, the Indian billionaire and chief executive of ArcelorMittal, proposed buying a near 25-per cent stake in Angang in a private meeting with Angang's chairman Zhang Xiaogang two months ago, the newspaper reported.

The deal could be worth at least five billion dollars, according to Angang's current market valuation, although financial terms were not discussed, it said.

"I had an informal discussion with Mr Zhang about various possibilities. As part of this, I tossed around a number of ideas," the London-based newspaper quoted Mittal as saying. Zhang turned down Mittal's proposal but told the newspaper that he would be interested in allowing the Luxembourg-based company a one to two per cent holding in his company, the report said.

"We (Angang and ArcelorMittal) can work together. We have similar ideas," said Zhang, adding the two companies could possibly take an equity stake in a standalone production venture, according to the report.

Angang, listed in Hong Kong, is a majority state-owned company. It produced 16 million tonnes of steel last year, second only to domestic industry leader Baosteel, the report said.