Consolidation must continue in steel industry: Mittal
Consolidation and globalisation must continue to be the dominant trends in the steel industry of the future, according to Indian-origin steel magnate Lakshmi Mittal.
On ongoing efforts by Tata Steel and Brazilian steel-maker CSN to take over Corus, he said the companies dominating headlines may change but the theme remained constant – consolidation.
"Today steel is a consolidating and globalising industry and I have been one of the biggest proponents of this," Mittal said at the Confederation of British Industry’s Interactive Conference here.
"When I started my company in 1976, the landscape could not have been more different. Steel was a strategic industry, a badge of pride worn by each nation – albeit usually a rather unprofitable one.
"It was not run with a commercial focus, being focussed more on maintaining production levels than profits. Indeed many of the companies I acquired through privatisation during the 1990s were in a precarious financial position, often on the verge of bankruptcy," he said.
"Where the steel industry is concerned, I have never had any doubts that globalisation is the right way forward and indeed the only way the industry can survive and reinvent itself as profitable and sustainable through the cycles," Mittal added.
According to him, China has a major role in the steel industry as it is the largest producer and consumer of steel. The country must also be part of the consolidation process if there is to be long-term success in creating a more stable operating environment.
He said: "China today has around several hundred steel companies. Reassuringly though, the Chinese government has announced ambitious plans to consolidate its industry, with the target being to create national champions, each with a 20-30 million tonne capacity, at the expense of smaller companies.
"It is important that a large step in this direction be achieved. The strategy of Mittal Steel has always been to build a global business model leveraging operational and financial synergies across the globe to create a more sustainable company operating in a more sustainable sector."
"Our recent merger with Arcelor has enabled us to take another large step towards achieving this," he added.
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