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. DollÃ© 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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