2006, is when Mittal proved his mettle

New Delhi: The year 2006 set new benchmark for the steel industry globally. And the one man who (quite literally) proved his mettle has been Lakshmi Niwas Mittal.

Mittal steel after much strife (with rival bidder Russian conglomerate Severstal) and speculation managed to win over UK steel company Arcelor--a deal that was being closely watched by world-over ultimately saw Mittal emerging as a winner.

Steve Mackrell, Director Operations, Iron and Steel Statistics Bureau says, “Mittal has set the standard, he's become if you like a global Coca Cola. They are number one; they are in charge. What we are now seeing is a realignment of remaining steel companies to become if you like the Pepsi Cola to challenge that Coca Cola."

Laxmi Mittal took the first big risks when unproductive state-owned steel plants were up for sale in East Europe and the former Soviet republics.

Andrzej Kotas, Chief Executive, steelonthenet.com had this to say. "Mital, ofcourse, came in, had the right attitude to risk, the right attitude to opportunity. Mittal had the first advantage, and once he had the first advantage, it's quite difficult to come in and match his offer."

Other players are learning that it pays to be big in this business. Kotas further adds, “Learning from Mittal has opened many people's eyes. What's become very obvious in the case of Mittal Steel is that as he becomes bigger he acquires economies, economies of purchasing. He is now the largest purchaser of iron ore in the world. And boy that gives him clout. And a few dollars on a tone of iron ore turns over those millions of tonnes of steel he makes into a significant saving.”

Others will not be able to do another Mittal, and Mittal himself is now looking to move differently.

Robert Jones, Steel Editor, Metal Bulletin says, “Although there are bargains to be had, you can't pick up steel plants for nothing any more. What you are seeing now is a slowing in the number of assets Mittal is acquiring and a switch in strategy towards greenfield projects in plant construction."

Mittal has set a standard that newly merging steel companies could not easily hope to match. What's on offer is too little, too late - and too costly.

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