Yalian Completes Agreement for 100% Interest in Yangzhou Subsidiary and Provides Update on Tongyu Private Placement

    VANCOUVER, Aug. 4 /CNW/ - Yalian Steel Corporation (TSX-V: YL) ("Yalian"
or the "Company") today announced that it has completed its previously
announced agreement (see news release dated April 20, 2009) with Jiangsu
Tongyu Steel Pipe Group Co., Ltd. ("Tongyu"), whereby Tongyu agreed to
withdraw its original paid-in capital of US$5.7 million and relinquish its 15
percent equity interest in Yangzhou Yalian Steel Pipe Co. Ltd. ("Yangzhou
Yalian"), a subsidiary of Yalian that owns all the assets of the Company's
facility in Yangzhou, Jiangsu Province, China. In addition, the Company has
received its business license reflecting the change in ownership. With the
receipt of the license and completion of the agreement, Yalian now owns 100
percent, and has full operational control, of Yangzhou Yalian.
    Under a separate transaction, also announced in the April 20, 2009 news
release, Tongyu has subscribed for 5,700,000 common shares of Yalian at a
price of US$1.00 (CAD$1.21) per share in a private placement. Tongyu has
received approval for the transaction from the TSX Venture Exchange and is
currently awaiting approval from the regulatory authorities in China to
convert its investment in Yangzhou Yalian to Yalian common shares. Upon
completion of the private placement, Tongyu will hold approximately 5.8
percent of the Company's issued and outstanding shares on a fully diluted
basis, further aligning its interest with the shareholders of the Company.
Yalian will continue to leverage Tongyu's resources, experienced management,
established sales relationships, and technical expertise, in order to
establish and grow its steel pipe business.

    Construction Update

    All civil construction for the main Yangzhou Yalian plant and ancillary
buildings is 95 percent complete. Since the beginning of June, Yalian has
shifted its focus from construction to equipment installation and testing. As
of the date of this news release, 75 percent of the equipment required for the
production line has been delivered to the plant and the installation of
critical components for the production line has been completed. The major
operators, main technicians, and engineers for the lab, testing, and quality
control operations are already on site. Debugging of the production line is
expected to commence in August.

    About Yalian Steel Corporation

    Yalian Steel Corporation is a British Columbia corporation focused on the
production of high quality Longitudinally Submerged Arc Welded (LSAW) steel
pipe to service Asia's rapidly growing energy transportation infrastructure
market. The Company is currently completing construction of its initial
manufacturing facility in City of Yangzhou, in the Jiangsu province of China.
Completion of the first production line, with a capacity of up to 200,000
metric tons per year, is scheduled for the fall of 2009. The Yangzhou Yalian
plant will utilize the JCOE (J-ing, C-ing, O-ing, Expanding) process, an
advanced method of LSAW pipe production that involves the bending and shaping
of X-80 grade steel.

    For further company information please access our website:

    Neither the TSX Venture Exchange nor its Regulation Services Provider (as
    that term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this press release.

    This press release contains forward-looking statements based on current
expectations. These forward-looking statements entail various risks and
uncertainties that could cause actual results to differ materially from those
reflected in these forward-looking statements. Risks and uncertainties about
Yalian's business are more fully discussed in the Company's disclosure
materials filed with the securities regulatory authorities in Canada. All
amounts are stated in Canadian dollars unless noted otherwise.

For further information:

For further information: YALIAN STEEL CORPORATION, George Dorin, Acting
Chief Financial Officer, Tel. No. (604) 696-6388

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