The Raja Of Steel

BusinessWeek : “Lakshmi Mittal is building the biggest steel company on earth. What will he do when the glut comes? “

The end of this article is very interesting …

Mittal will doubtless keep seeking ways to expand. Dollé of Arcelor thinks that in 10 years the industry will be dominated by four or five majors. The candidates include Mittal, Arcelor, Shanghai Baosteel Group, a Japanese entry, and, possibly, Posco (PKX ) in South Korea.

Mittal still has holes to fill in his portfolio. The big priority is China — a tough nut to crack. He recently launched a $100 million finished steel operation Liaoning province. But acquisitions are getting more competitive. A bid by U.S. Steel drove up the price of the Polish plants, and Mittal lost out to the Pittsburg-based rival on a plant that he coveted in Slovakia in 2000.

And while Mittal has low costs, big capital commitments could be a stretch during a downturn. In the last steel slump his companies struggled. Mittal figures that consolidation and a focus on profits rather than volume in the industry will head off supply gluts in the next crunch. Others, including some Mittal insiders, think the next downturn could be vicious. A wild card is China, which in the last decade has added capacity equal to 90% of the eurozone.

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