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Arcelor plays China card against Mittal

Arcelor said it would produce 100 mn tonnes annually in five years' time with the help of the Communist nation.

india Updated: Feb 05, 2006 14:41 IST
Press Trust of India
Press Trust of India

Playing the China card to ward off the takeover bid by NRI steel tycoon Lakshmi Mittal, Arcelor has said it would become a steel giant producing 100 million tonnes annually within five years and that its deals in the Communist nation will be a key path to growth.

Michel Wurth, Vice President and Chief Financial Officer of the Luxembourg-based Arcelor, hoped that investors would reject the 23 billion dollar hostile bid from the Mittal Steel, the world's largest steel producer owned by Mittal.

Arcelor could reach 100 million tonnes a year by itself - by expanding its operations, particularly in Brazil, and acquiring high-value assets - rather than by joining with Mittal, he said in an interview published in The Observer on Sunday.

"We look to 100 million tonnes in five years' time. We have the opportunity with a very nice growth strategy," he said.

Arcelor sees China as a key growth market for high-grade steel for its rapidly expanding automotive market. "There is also strong demand for steel for infrastructure development, construction and appliance manufacturing," Wurth said.

Mittal Steel makes 57.6 million tonnes of steel a year, while Arcelor, the number two steemaker, makes 47 million tonnes. Mittal says the combination - which would be larger than the next three producers combined - would produce unprecedented benefits of scale and place it at the forefront of inevitable consolidation in the global steel industry.

On the other hand, Wurth pointed to recent acquisitions of Erdemir in Turkey and Dofasco in Canada, which add some 10 million tonnes to output. "Then we are negotiating deals in China, which have not yet closed," said Wurth.

First Published: Feb 05, 2006 14:41 IST