India celebrates as Mittal swallows Arcelor
The acquisition of Arcelor could pave the way for the new entity to have a firmer grip on the Indian market.
By TNN |
KOLKATA: It is almost six months to date that Mittal Steel announced its takeover bid for Arcelor on January 27. The acquisition of Arcelor by Mittal Steel could pave the way for the combined entity to have a more vice-like grip on the Indian market.
The man who is known as one of the fastest movers in the steel circuit, had pipped Arcelor to the post a few months back vis-à-vis India. While Arcelor had been evincing its strong desire to mark a manufacturing presence in the country, LN Mittal went on a blitzkrieg and signed a memorandum of understanding (MoU) for setting up a greenfield 12m tonne plant in Jharkhand.
The Jharkhand project will be implemented in two stages of 6m tonnes each, taking an estimated 48 and 54 months, respectively. “India offers good opportunities for growth. We want to be present in India and we need to formulate a strategy for it,” Alain Davezac, VP (international business), Arcelor, France had said at Steel Metallics ’05, a industry seminar held in Kolkata in October ’05.
Mittal Steel, on the other hand, has already moved ahead with its plans. It has identified six locations in Jharkhand for its 12m tonne greenfield project and will shortlist one of them within the two months. The shortlisted locations are Turpa, Govindpur, Muri, Serailkela, Santhal Pargana and North of Ghatsila.
“India’s GDP is growing at 8% every year. In step, the country’s steel demand is also estimated to go up significantly. Alongwith China, India thus forms an essential part of our growth plans,” Mr Mittal had told ET in October just after signing the MoU with the Jharkhand government.
Growth projections apart, much of Mittal Steel’s India focus also stems from a more fundamental business need — access to high quality raw material reserves of iron ore and coal.
Steel Authority of India (SAIL) has proved time and gain to be a happy hunting ground for Mr Mittal. Mittal Steel picked up Sanak Mishra, who retired as managing director of Rourkela steel plant (RSP) on December 31, ’05 as CEO of its India operations.
The man who is known as one of the fastest movers in the steel circuit, had pipped Arcelor to the post a few months back vis-à-vis India. While Arcelor had been evincing its strong desire to mark a manufacturing presence in the country, LN Mittal went on a blitzkrieg and signed a memorandum of understanding (MoU) for setting up a greenfield 12m tonne plant in Jharkhand.
The Jharkhand project will be implemented in two stages of 6m tonnes each, taking an estimated 48 and 54 months, respectively. “India offers good opportunities for growth. We want to be present in India and we need to formulate a strategy for it,” Alain Davezac, VP (international business), Arcelor, France had said at Steel Metallics ’05, a industry seminar held in Kolkata in October ’05.
Mittal Steel, on the other hand, has already moved ahead with its plans. It has identified six locations in Jharkhand for its 12m tonne greenfield project and will shortlist one of them within the two months. The shortlisted locations are Turpa, Govindpur, Muri, Serailkela, Santhal Pargana and North of Ghatsila.
“India’s GDP is growing at 8% every year. In step, the country’s steel demand is also estimated to go up significantly. Alongwith China, India thus forms an essential part of our growth plans,” Mr Mittal had told ET in October just after signing the MoU with the Jharkhand government.
Growth projections apart, much of Mittal Steel’s India focus also stems from a more fundamental business need — access to high quality raw material reserves of iron ore and coal.
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The company already has a strong presence in central Europe, Asia, particularly China and Africa, regions which have low-cost production, high growth prospects and significant raw material reserves. In particular, the combination of Mittal Steel and Arcelor could reduce third party supplies of iron ore and coal. By ’10, the combined group aims to be about 50% self sufficient in iron ore. India is poised to bear a vital burden in the entire scheme of things. Steel Authority of India (SAIL) has proved time and gain to be a happy hunting ground for Mr Mittal. Mittal Steel picked up Sanak Mishra, who retired as managing director of Rourkela steel plant (RSP) on December 31, ’05 as CEO of its India operations.
With his appointment Mr Mishra joined an elite ‘SAIL Club’ at Mittal Steel. Malay Mukherjee, COO of Mittal Steel and Narendra Chaudhary, director (operations & maintenance) — were both high fliers at SAIL before being picked up by Mr Mittal. KAP Singh, who is now CEO of Mittal Steel Galati, was also a top SAIL executive.
In his capacity as CEO of Mittal Steel’s Jharkhand operations, Mr Mishra’s task includes preparation of a detailed project report (DPR) to identify the location of the steel plant, iron ore and coal mines and water sources for the proposed venture.
Mittal Steel has already engaged Hatch Associates to provide consulting and engineering services to prepare a project concept study for the DPR. Hatch will provide professional services for the analysis of the markets for steel products in India, and prepare a concept and design basis for the proposed 12m tonne per year steel plant.
A few days back Mittal Steel was said to have sought a Letter of Comfort from the Jharkhand government about requisite iron ore supplies for its 12m tonne steel plant in the state. “We have asked the Jharkhand government to provide us with the Letter of Comfort regarding provision of iron ore required for our greenfield project within two months from the Chiria mines, after sorting out the nitty-gritty with the Centre,” agency reports had quoted Mittal Steel Jharkhand CEO Sanak Mishra as saying.
Mr Mishra had since made it clear that the world’s biggest steel-maker was unable to commence its work for the steel mines unless the Arjun Munda government extended the said assurance.
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“Any delay in providing the Letter of Comfort only adds to further delay in commencing work for the said plant entailing time delays coupled with cost overruns,” Mr Mishra had said. Mittal Steel has demanded 600m metric tonnes of iron ore from the said mines for the first 30 years to meet its operational needs. In the MoU signed with the Jharkhand government, Mittal Steel has pledged that it would make a whopping investment of Rs 40,000 crore besides providing both direct and indirect employment to hundreds of people.
Mr Mishra said the company has fulfilled its initial requirement enshrined in the MoU by opening a office at Ranchi and christening the company as Mittal Steel Jharkhand.
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