The addition of aluminium (and of silicon) to steel increases its electrical resistivity and reduces therefore the power losses in electrical devices. There is also a favourable effect on magnetostriction. Nevertheless, these additions make the steel extremely brittle and very difficult to process through a conventional thermomechanical route. The authors developed an innovative processing route, avoiding the rolling of a brittle steel sheet. The used process consists of the hot dipping of a steel substrate in a pure aluminium bath, followed by a diffusion annealing treatment. In order to study the reaction of the aluminium with the substrates and the diffusion process during further annealing, two substrates (ultra low carbon steel (ULC) and a Fe + 3.4 m.-% Si steel) were used for immersion in a pure aluminium bath. Dipping times and temperatures were varied in the range of 700 to 750 °C and 5 to 1000 sec., respectively. The different surface layers formed during dipping and after annealing were characterised with an Elcometer, by Scanning Electron Microscopy (SEM) and by Energy Dispersive Spectroscopy (EDS). The results show that the chemical composition of the layers obtained is strongly dependant on the initial substrate composition. Diffusion gradients of Al and Si in the steel after hot dipping and diffusion annealing are shown and discussed. Samples with a concentration gradient of Si and Al over the thickness have been produced. There is only a light reduction of the power losses for the substrate with 3.4 m.-% Si. The ultra low carbon substrate presents worse power losses after the processing. Further improvement of the processing is still required.