Mittal: Scaling the wall

Calcutta, Oct. 10: Mittal Steel is eyeing further opportunities in China, the largest steel producer and consumer in the world.

The company, which recently entered the Chinese market by buying into Hunan Valin Steel Tube and Wire, is planning more acquisitions.

?One cannot ignore a country like China which makes and consumes one-third of the steel produced in the world. We are looking at further opportunities there,? Sudhir Maheshwari, executive vice-president (finance and corporate treasurer) of Mittal Steel, told The Telegraph.

Mittal Steel plans to ramp up its capacity from 70 million tonnes to over 100 million tonnes in the medium term.

Group chairman L.N. Mittal had earlier said that three to four companies producing between 80?100 million tonnes need to emerge with footprint in all the main global regions.

?The top-ten producers should comprise at least 40 per cent of the total marketshare,? he said.

Maheshwari said China would play an important role in realising that target in future. Chinese production has gone up to 300 million tonnes but there are a number of players.

The Chinese government has mooted a consolidation in the steel industry favouring only a few big players having large capacities. As a result, there would be a spate of mergers and acquisitions in the Chinese steel sector.

?We are aware of the consolidation drive that the Chinese government is proposing. Hunan has given us a foothold in that market,? Maheshwari pointed out.

He declined to comment on what could be the ideal capacity for Mittal Steel in a 300-million-tonnes market.

Bao Steel has hundreds of smaller units in China. The government is proposing structural changes there.

China?s steel production has risen over 25 per cent so far this year compared with 2004. However, the Chinese government is looking at curbing unchecked growth in steel capacity addition.

China and India are two of the fastest growing steel markets in the world and most global companies are looking at them seriously. Posco, the Korean steel major, has plans to invest over $10 billion in India. It is looking at investment opportunities in China, too. Mittal Steel has committed over $9 billion investment in India. In contrast, the $338 million investment in China?s Hunan is much smaller in nature.