Chesterton Tribune

Arcelor Mittal expects to make up to 200 million metric tons of steel by 2015

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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 purchasing.

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 unit.

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 shed Dofasco.

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 company grew.

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.




Posted 9/28/2006