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Lakshmi N Mittal, Chairman & CEO, Mittal Steel Company, the world's largest steel producer, said on Tuesday that the proposed Mittal-Arcelor deal is going to be a major step towards further consolidation of the steel industry that is needed for its future.
He said that the future health of the growing steel industry depended on further consolidation and the Arcelor-Mittal deal was the most important aspect of that.
"They are complimentary to each other. They have a lot of synergies. They share the same region. I think no other combination can match Mittal Steel and Arcelor for the future of the industry. We need more companies to consolidate," Mittal said at a steel industry conference organised by American Metal Market and World Steel Dynamics in New York.
Mittal, who was the highlight speaker at the annual conference, was loudly cheered by the members of the audience as he took to the podium.
"We are not working for financial institutions, we are working for ourselves and for our customers and shareholders," the doyen of the steel industry said amid cheers.
"If we can show them reduced volatility, show them steady and balanced growth and supply, we do not need futures contract," Mittal said, referring to the London Metal Exchange's bid to develop steel markets future contracts.
In response to a question Mittal said that the Mittal-Arcelor combination is going to be a unique one in the steel industry from the points of view of the company and shareholders. "They are really complimentary to each other, there are a lot of synergies and they share the same vision," he said.
"No other combination can match the Mittal Steel-Arcelor combination. This is what I have been trying to convince for the last five months and I hope that you are the jury, the 1,300 jurors sitting here who can really decide what is better for the steel industry, for your shareholders and for the future of the next generation," he said.
"Continued consolidation is taking us toward the stability and sustainability we desire. The steel industry is in the early stages of a renaissance that will see it move towards creating stability and sustainability," he said.
Looking at the huge outcome of the conference which was attended by over 1300 people from the steel industry, Mittal congratulated the sponsors.
"We must surely also congratulate them for the hat-trick they have managed to pull off, getting Guy Dolle, Alexei Mordashov and myself into the same room on the same day!"
Mittal outlined his vision for the model of the future, saying that he was optimistic about the outlook for the industry. He said that the challenge now was to ensure that this industrial transformation translates into investment renaissance.
Speaking to the PTI after his highlight speech, Mittal made it clear that the talks with Arcelor were due to last a few more days.
He said he and Guy Dolle, CEO of Arcelor, who spoke to the audience and shareholders in the same room at different times, did not have plans to meet that day regarding the
amalgamation.
"There is no meeting at all planned, however I am very optimistic about its merger in the near future. Only the Mittal Steel-Arcelor combination would be a truly transformational deal for the steel industry."
He left it to the shareholders, saying: "You can decide what is best for the future of the industry."
"Shareholders must be at the heart of this business," Mittal said. "That is what my efforts are focused on achieving."
Analysts agree Mittal is making progress, pointing to Arcelor's decision to cancel a shareholder meeting scheduled for this week amid shareholder concern over the company's tactics.
Mittal Steel and Arcelor intensified their campaign to win over shareholders with rival advertisements in European newspapers aimed at influencing next week's vote on Arcelor's proposed link-up with Russia's Severstal.
Mittal Steel, meanwhile, took out full page advertisements in the French national press, The Financial Times, The Wall Street Journal and The International Herald Tribune, to present its case to Arcelor shareholders.
Arcelor also, to win over shareholders, in its own ad in Le Monde and other papers, said, "Take the profitability of the Mittal Steel project, add 23 per cent and you have the Arcelor-Severstal project."
Lakshmi Mittal of Mittal Steel and Guy Dolle of Arcelor each spoke at an industry conference in Manhattan, with attendees buzzing about the bid and what it meant for the future of the steel industry.
At a speech during lunch, Dolle said concentrating an industry is not "the magic path" to higher profits. He said: "Size is not the magic driver toward value creation," and "consolidation differs from amalgamation."
He added that "the Arcelor way" was based on value, not volume. "Mittal is very optimistic about India vs China growth. However, there is a difference that keeps India behind China today and that is its infrastructure and administrative differences. In China things happen fast," said Dolle.
"Transformation will count for little if we cannot persuade shareholders that the industry leaders can deliver the sort of sustained financial performance they desire," he said.
With inputs Seema Hakhu Kachru (PTI)