The
global steel industry for long has struggled with too much
of fragmentation and inefficiency. Of the total capacity of
about 1,000 million metric tones (mmt), the top 10 firms account
for a meager 20%. Hence, when LN Mittal-promoted Mittal Steel
announced its hostile bid for Luxembourg-based Arcelor on
January 27, 2006, it not only signaled the intention of the
world's largest steelmaker to gain further size but also suggested
that the time may have come for big-ticket consolidation.
And LN Mittal, the man behind the global steel giant, makes
no bones about his intentions to lead the consolidation of
the global steel industry from the front.
Indeed,
Mittal has been at the forefront of the consolidation in the
world steel industry. In fact, it was he who not only recognized
the need for size and scale, long before others did but also
capitalized on it. What has driven the group's consolidation
efforts is the belief that to deliver the range and quality
of products that the customers demand, a steelmaker needs
to have the scale and worldwide presence to do so, competitively.
Scale and a global footprint have their own advantages. The
ability to aggregate global purchasing gives the firm flexibility
to source raw materials at favorable prices. This is what
Mittal Steel has demonstrated well. And a global presence
ensures consistent customer service worldwide. But will the
Steel Czar, as Mittal is also referred to, who has pounced
on several small preys, be able to win the big battle with
Arcelor? History seems to be on his side. |
