Longhai Steel, Inc.: Exhibit 10.12 - Filed by newsfilecorp.com






Exhibit 10.12 

Lease Agreement 

Party A: Xingtai Longhai Steel Group Co. Ltd. 
Party B:
Longhai Steel Inc. 


Party B will lease some portion of Party A’s property, plant
and equipment; therefore both parties, on a friendly, free and fair basis, agree
to the terms below: 

	1. 	
      Area of lease agreement: the land, property located 125
      meters start from the south wall of Longhai Group and 724 meters beginning
      from the east wall, with a total area of 90500 m2 and all wire
      making equipment contained therein.

	 	 
	2. 	
      Lease term: the agreement will be effective for a period
      of 5 years, renewable at Party B’s discretion.

	 	 
	3. 	
      Party B will have right to cease the agreement at any
      time with at least 30 days advance notice to Party A.

	 	 
	4. 	
      Lease fees and payment: the annual lease fee is
      RMB14,000,000, payable in two installments every six months. The payment
      will be RMB7,000,000 per payment. The fees shall be paid before the
      15th of each payment month, and the first payment should be
      made with 15 days of the effective date of this Lease Agreement.

	 	 
	5. 	
      The rights and obligations of the
  parties:




	 	a) 	
      Party B will have all rights to utilize the lease object,
      Party A cannot intervene in Party B’s operations, Party B will guarantee
      Party A’s the security and integrity of the assets.

	 	 	 
	 	b) 	
      If, due to Party B’s operational needs, Part A must
      modify or expand the facilities, Party B shall give at least 30 days
      advance notice to Party A. Party A shall be responsible for equipment
      modification fee. Party B shall be responsible for regular equipment
      maintenance fee.

	 	 	 
	 	c) 	
      Party B shall be responsible for tax associated with the
      land’s usage.

	 	 	 
	 	d) 	
      Party B should make all payments on time. If due to a
      shortage of cash flow, Party B needs to extend the payment, Party B shall
      notify Party A 10 days in advance. The extension shall not exceed 2
      months.

	 	 	 
	 	e) 	
      Party B’s water expenses Party A. Party B will pay other
      utilities directly based on its usage directly to the supplier.

	 	 	 
	 	f) 	
      Party A should provide free security and after support
      service to Party B to ensure Party B’s asset’s security and quality
      operation.

	 	 	 
	 	g) 	
      Party A should guarantee the gas supply for Party B. And
      Party B shall pay the expenses associated with the supply of
gas.

	 	 	 
	 	h) 	
      Party A shall issue an invoice to Party B one month from
      the day of the payment is to be received.




	6. 	
      Any other matters not expressly stated herein, both
      parties will, on and fair and free basis, execute supplemental
      agreements.

	 	 
	7. 	
      This agreement will be made in two copies, and each party
      shall hold one copy.

	 	 
	8. 	
      This agreement will become effective as soon as the
      facilities are operational and the company is listed on the NASDAQ stock
      exchange, which is anticipated to be no later than January 31,
  2011.



Party A (Seller): Xingtai Longhai Steel Group Co. Ltd. 

Party B (Purchaser): Longhai Steel Inc.