BRUSSELS, Belgium (AP) -- Arcelor SA and Mittal Steel Co. NV said Wednesday
they expect their combined company will produce between 150 million and 200
million metric tons (165 million to 220 million tons) of steel by 2015 as
world demand rises.
Last year, the two companies produced 112 million metric tons, dwarfing
nearest competitor Nippon Steel at 30 million metric tons. This year it
forecasts production to stay in that range at between 100 million to 115
million metric tons.
Arcelor Mittal is being formed by Netherlands-based Mittal’s $31.9 billion
acquisition of Luxembourg-based Arcelor.
The companies said global steel consumption would grow by 3 percent to 5
percent by year for the next 10 years.
But the new CEO Roland Junck warned investors that steelmakers would have to
reckon with higher raw material costs in the future.
Speaking to investors in London, he said the companies believe they can
achieve $1.6 billion in savings and added revenue in the first three years
after combining as they cut costs on manufacturing, marketing and
Arcelor Mittal restated its revenue forecast of 70 billion euros to 72
billion euros ($87.5 billion to $90 billion) this year and said its debt is
18.2 billion euros ($23 billion).
Ratings agencies Fitch Ratings and Standard & Poor’s have both warned of
lower ratings for the combined company based on the amount of debt Mittal
will take on. This will increase the company’s cost of borrowing and could
add to the cost of further expansions.
Mittal managed to buy 92 percent of Arcelor last month and still has a
mandatory cash offer for the remaining Arcelor shares that is due to close
on Nov. 17.
The two said the combination should be completed by the end of the second
quarter in 2007. Mittal is still to decide if it will appeal a Brazilian
regulatory ruling that obliges it to make an offer for Arcelor’s Brazilian
No final decision has been made on the two companies’ North American units.
Mittal is legally bound by a U.S. Department of Justice decree to sell off
Canadian steelmaker Dofasco Inc. before Nov. 28 -- a deadline that can be
extended by another 60 days.
However, Arcelor locked Dofasco into an independent trust to prevent a
resale. The Dutch trust would have to dissolve itself for the new firm to
Mittal’s alternative is to sell its plant in Weirton, W. Va., it said.
Arcelor Mittal’s board of directors on Wednesday also announced a new policy
to issue an annual base dividend of $1.30 a share that would rise as the
As part of plans to return 30 percent of net income to shareholders every
year, it said it would also buy back shares and would give more details when
it publishes its annual results.