ARCELOR MITTAL

Santosh
Arcelor Mittal- An
Overview
Largest steel company in the world.
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281,000 employees in 60 countries.

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Formed in 2006 by the merger of Arcelor and Mittal
steel.
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Ranks 28th on the 2009 Fortune Global 500.
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Market leader in steel for use in automotive,
construction, household appliances and
Corporate Philosophy
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To be able to deliver the range and quality of

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products customers demand, the modern

steel maker must have the scale and
worldwide presence to do so competitively
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Acquisition Trends…
Drivers of acquisition…
Horizontal integration
Economy of scale
Technology/Knowledge transfer
Enhance profitability through implementation
of "best practices"
Achieve synergies
Strengthen business in core sectors, e.g.:
automotive
Access to Oil and gas fields
Access to rare natural resources
Transition from horizontal to Vertical
integration
Eclectic Paradigm…
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Challenges:
 Strong opposition from the Directors of the companies as well as the
French and Spanish Governments
 Restructuring
 Employee layoffs
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Merging of two separate heterogeneous entities with different working

styles, considered “an advantage ?”

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Impact:

 Outsourcing of various non core business units

 Unilateral job restructuring
 Down grading of employment benefits
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 Arcelor Mittal’s Integration Task
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“integrating integration” - Bill Scotting (Group Management

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Board- Integration Team)

 Group Management Board (50-50) & Integration Team – 12
 Top- down target of $1.6 billion of synergies – $ 1.4 billion
achieved by the end of the 4th quarter of 2007
 Progress monitored on a weekly basis
 BUs to assume ownership of mergers
 Group management conducted “road shows”
 Encouraged journalists to visit sites
 Health and safety day
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Vital Success Factors

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 Speed
 Energy
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Emerging Markets – China /
India
China
 Background:
 Fragmented Industry
 China is leading producer and
consumer of steel
Barriers:

 In China, policies limit foreign ownership

to minority status
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Mittal’s current move:
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 Strategic JV with Chinese steel

companies
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CSR in China
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 UN with Arcelor Mittal is helping China

invest in cleaner industrial technology
 Partnership agreement with the China
Europe International Business School
(CEIBS)
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India
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Background:
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 Boom in infrastructure and housing projects

 One of the lowest-cost producer of steel in the
world
 Close proximity between raw material and plant
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Barriers:
 Issues from local population
 Regulatory issues
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Mittal’s current move:

 Joint Venture with Uttam Galva

 Considering Karnataka, Jharkhand, Orrisa
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CR in India

 ArcelorMittal would spend about Rs 2,400 crore

towards corporate social responsibility (CSR)
programmes
Liberia
Background :
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 Investment in iron-ore sector - insulation

from increasing iron ore prices and
supply of raw materials

 Liberia needs to rebuild its war ridden

economy
 C h a lle n g e s :

P ro vid e th e w a r a ffe cte d yo u th s w ith e d u ca tio n & training, in addition

to e m p lo ym e n t
Tu rn a ro u n d th e a b a n d o n e d ( 1 9 8 9 ) Lib e ria n - S w e d ish -A m e rica n
co m p a n y , La m co

A ctio n P la n :
“Liberian investment, company cornerstone in West Africa”- Mittal
Rehabilitation of an abandoned iron ore mine in Nimba County.
Renovation of the port of Buchanan, to accommodate iron ore carriers.
Construction of a 250-megawatt power plant to supply an iron ore
processing facility.
Rehabilitation of the 270 kilometre railway from Buchanan to Yekepa.
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Recommendations
Build and sustain relations with the emerging
markets
Improve CSR activities
Look into environmental and health and safety
issues especially in the least developed
economies
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 Thank you