Mittal's
billion-dollar mind
Port Spain
Petroleumworldtt.com
12 09 07
What manner of mind could move a relatively unknown
Indonesian based firm from obscurity to becoming
the largest steel operation in the world in less
than 20 years? It takes a master entrepreneur to
so do and that is what Lakshmi Mittal is proving
to be. Mittal is the owner of Arcelor Mittal, now
the world largest integrated steel company, whose
assets include the facilities at Point Lisas. In
2005, Mittal was rated the world third richest
man with a net worth of US$25 billion.
Mittal grew up in a deprived and remote Indian
village with no running water until the age of
five. He was born into a family of Marwaris, a
group from the Indian state of Rajasthan who are
notorious for producing shrewd merchants. It all
began with Mittal's father who in 1977 started
a small steel company in Indonesia. Then in the
late 1980s, Lakshmi Mittal himself started to spread
his wings globally. First, in 1989, Mittal, his
father along with two younger brothers won the
contract to manage ISCOTT, renamed ISPATT (they
leased then bought the company) an arrangement
that was made under the then NAR government. It
seemed to be the best move the Government could
have made at the time as ISCOTT was reportedly
making very heavy losses. However, it is this same
shrewd business mind that made this loss making
Steel mill into what it is today. Arcelor Mittal
Steel Point Lisas is now the largest steelmaker
in the Caribbean as well as the largest non-oil
industrial complex in Trinidad and Tobago. It profits
from reasonably priced, locally available natural
gas. In addition to that it has a modern, captivating
marine terminal that handles cargo on a 24-hour
basis. More than 90 per cent of its output is exported
- to the Caribbean, Central and South America,
Canada, the USA and the Far East.
Mittal's
strategy from inception in the late 1980s was
to pull together a portfolio of assets by acquiring
fading steel mills that nobody else wanted. The
significant early acquisition came in 1992, when
he gained control of a two-million tonne plant
in Mexico, Sibalsa Mill, for US$220 million. Mittal
increased employee output five-fold and soon it
was accounting for 63 per cent of the group's profit
becoming the "crown" of the empire. In
2001, the company's US$2-billion Mexican operation
was teetering on the edge of default. However,
Mittal transformed crisis into opportunity by snatching
up plants in Eastern Europe as well as Algeria
at rock-bottom prices. Consequently, Mittal doubled
his company's annual production capacity to 30
million tonnes within just two years.
Afterward, in 2004, Lakshmi Mittal - by then chairman
as well as main owner of the Netherlands-based
Mittal Steel - acquired Ohio-based International
Steel Group, itself a recent agglomeration of famous
names such as Bethlehem Steel and LTV.
At that time, ISG had recently acquired the mothballed
assets of Cliffs and Associates Limited at Point
Lisas. The major turning point came during 2006,
when Mittal launched an audacious US$38 billion
takeover bid for Luxembourg-based Arcelor - the
No.2 steelmaker in the steel industry. When he
eventually acquired Arcelor, for US$22.4 billion,
the resulting enterprise, ArcelorMittal, accounts
for about US$70 billion in sales and 10 per cent
of world steel production, almost quadruple that
of their closest competitor, Japan's Nippon Steel
Corp. The combined firm provides work for 320,000
persons on four continents. Arcelor is a major
producer of high-value steel used by the automotive
industry, whereas Mittal is more in the high-volume
low-quality steel business, and there is little
product overlap. The two companies are projecting
synergies of US$1.6 billion post-merger, with revenues
touching US$80 billion.
The
Government of Trinidad and Tobago must be rueing
the decision not to at least maintain an
equity share of the steel mill and also to leverage
that share to acquire part of the Mittal global
operations. The company's consolidated market power
enables it to influence the levels of supply if
not price. An imminent danger for T&T is that
the facilities here are now part of a global corporation
and faces the risk of closure in the event of a
global rationalization of output.
As
has been the case with so many celebrities, Mittal
has not been able to avoid escape conflict
associated with his links with politicians and
rulers across the globe. In 2002, Mittal survived
the disclosure that British Prime Minister Tony
Blair had intervened to help him purchase Romania's
Sidex Works shortly after the mogul had made a
US$235,000 donation to Blair's Labor Party. It
is reported that last year, Mittal jetted Bill
Clinton and New York Senator Hillary Clinton to
a celebrity wedding in India in his private Gulfstream
plane. Mittal's influence seems to have extended
to T&T. Unknown to many, Mr. Uthana Rao - Prime
Minister Patrick Manning's choice of Chairman of
the Estate Management Company is also the Chief
Executive of Acelor Mittal (Point Lisas).
Story
by Energy Correspondent from
Trinidad Express
-energyczartt@yahoo.com
Trinidad
Express
Wednesday, December 5th 2007
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