ONCE Britain’s richest man (see our sister Asian Rich List 2009), Lakshmi Mittal is probably at least thinking about full retirement from the cut and thrust of being at the helm of the world’s largest steel company, ArcelorMittal.
Valued at more than some $50 billion as a company with nearly 170,000 employees, the Indian-born 71-year-old tycoon still remains something of an enigma. He has not done many interviews and rarely speaks to the media about anything.
Many of those who know him say he is the consummate dealmaker – and the proof is very much there in the pudding – though from a successful Marwari trading family who had interests in steel, he branched out to manage his own plant in Indonesia and has never looked back.
His skill is in management and strategic planning – plotting his moves rather like a grand chess master.
Each move would leave him stronger and more capable of making the next.
It was reported in February 2022 that Kazakhstan president Kassym Jomart Tokayev had met Mittal via a videoconference to discuss ArcelorMittal Temirtau (AT) – his Kazakh outfit there which he acquired in 1995 and is a metal and mining complex and has one of the world’s largest integrated steel plants. The nearby town of Temirtau has more than 150,000 inhabitants and many work for AT.
Nothing spectacular appears to have come out of the meeting but the government there is keen for better safety and increased investment in cutting carbon emissions (with a target of 30 per cent by 2024 and half by 2030) and creating a better environment for Karaganda region and better pay for AT employees.
Mittal’s ability to wheel and deal and see opportunities where others hesitated is perhaps well documented now, but in in 2006 his successful bid for Arcelor, a crumbling multi-national, European Luxembourg-headquartered firm was seen as audacious and bold and improbably risky.
“We are driven by an entrepreneurial spirit and a passion for excellence, never accepting that the limits of our material have been reached. We will continue to push boundaries, whether developing technologies to reduce the carbon footprint of steel, transforming the built environment with our new construction solutions, 3D printing automotive parts using steel powders or, through the adoption of artificial intelligence and advanced automation across our operations.
“This is what it takes to be the steel company of the future,” is a statement from the ArcelorMittal website from last year – but it perhaps best outlines Mittal’s own vision and what he believes he, his family and his company stand for.
Today, ArcelorMittal the company Mittal created by merging his then Mittal steel interests to create the global giant – can be viewed as a move which took the entrepreneur to the very next and highest level.
Such is the industrial might of ArcelorMittal today and the personal regard he commands as a business figure that political leaders will take his calls – sometimes they have even been known to call him.
A philanthropist who has donated money to good causes globally, he continues to live in London – even though ArcelorMittal HQ remains in Luxembourg and many operations continue to be at the heart of some EU countries. Perhaps the most significant development since the pandemic, has been the elevation of his son, Aditya to group chairman and CEO, from being chief financial officer. Mittal senior (L. Mittal) is now executive chairman of the Luxembourg incorporated entity.
“The board unanimously agree that Aditya Mittal is the natural and right choice to be the company’s chief executive,” Lakshmi Mittal said.
“We have worked closely together since he joined the company in 1997, indeed in recent years we have effectively been managing the company together.”
The younger Mittal, 46, began his career as a banker with Credit Suisse, returned the compliment: “Mr Mittal (Lakshmi Mittal) built the ArcelorMittal from a greenfield rolling mill in Indonesia to become the world’s leading steel company.
“It is an extraordinary achievement and I am privileged to have witnessed and been part of so much of that journey.”
The young Mittal had helped to create the world’s largest steel company in 2006 – when the Mittals originally launched their bold bid for Arcelor.
What was less reported on at the time of this announcement in management structure was other organisational changes the company made, announced in February of 2021.
Belgian Geert van Poelvoorde (corr) became the new CEO of ArcelorMittal Europe.
A civil and electronic engineer by background, the Ghent University graduate started out as a manager at a Luxembourg steel mill and became chief operating officer at ArcelorMittal in 2008.
Since 2015, van Poelvoorde has been president of Eurofer – the European Steel Federation. The company said: “He is now responsible for the full scope of AreclorMittal’s activities in Europe.”
Another top-level executive – Yves Koeberle was handed a new position as CEO of ArcelorMittal Europe-Flat Products.
At the same time, the company also announced it had a new $1bn cost reduction plan in place and had restarted dividend payments after higher than expected fourth quarter earnings.
Jumping to the end of 2021 – the company said it had reduced its net debt to $4bn (£3.2bn) as against a similar figure of $6,4bn and the end of 2020.
The company’s balance sheet still showed a loss of $733 million but sales appeared to be picking up as the threat of the coronavirus began to recede towards the end of 2022. It expected its steel market to grow by 2.5-three per cent and steel shipments to increase by three per cent.
These final fourth quarter results were published on February 10 and obviously make no reference to the Russian invasion of Ukraine and how that might affect ArcelorMittal trading.
The company also expected strong EBITDA (earnings before interest, taxes, depreciation, and amortisation – a way of accounting debts and other commitments).
Aditya said things were looking good – the only blemish was safety – there continued to be challenges in that area and he said the company was determined to address them. He conceded: “The one area where we are not satisfied is safety. We want to do better and we have to do better. Across the organisation all our efforts are focused on this most important outcome.”
More widely, he said that markets were buoyant and that recent investment and partnerships especially the one with Nippon Steel (NS) were helping to advance the company’s cause. The global economic rebound post initial Covid-19 restrictions being lifted supported buoyant demand in all markets delivering very high levels of profitability.
This further strengthened our balance sheet and enabled the delivery of consistent returns for shareholders as well as targeted investment in our business.
Recent investments, both organic and acquisitive, have long-term strategic value – with the Mexico hot strip mill set to ramp up this year, the construction of the Calvert electric arc furnace underway, and the AM/NS India joint venture performing well and poised to capture further opportunity in this fast-growing market.”
More shipments, improved margins and better performance in its mining operations had all assisted, the company reported broadly picking up where it had left off at the end of 2020. Aditya reiterated the company’s commitment to decarbonising – it has pledged to cut CO2 emissions by a quarter by 2030 – developing a new range of products under the XCarb brand.
“We start 2022 ready to build on the progress already achieved for long-term sustainability and success. Industry fundamentals remain positive, supported by re-negotiated automotive contracts.
“Our balance sheet strength enables us to invest in the most compelling organic growth opportunities and continue our transition towards low emissions steelmaking.
“We see increasing evidence of stakeholder understanding and support for the transition to zero-carbon steel-making. We look forward to further building on this progress achieved, in 2022.”
At the beginning of March 2022 it was confirmed that ArcelorMittal had acquired a Scottish recycler John Lawrie Metals.
The full details were not available at the time of going to press but the company with several sites throughout Scotland, including Aberdeen and Shetland. John Lawrie’s business includes handling scrap from the decommissioning of large oilfields and the like and supplies ferrous scrap to plants in Spain.
Analysts thought the move on John Lawrie was to increase supplies to its mills in that country with Sestao in Bilbao being among the most prominent.
There’s little doubt that ArcelorMittal has weathered the most difficult of storms over the last two years – some would say over a longer period, it has got to grips more fundamental issues connected to it and itself only.
It is worth noting that the pandemic forced them to do a deeper and wider analysis of where their business was going.
Aditya Mittal in his message to the company on his appointment, reflected that the pandemic had not only caused enormous disruption but that it “had also taught us all a lot. It flattened our organisation, made us very agile, very united, and even more passionate.”
He went onto outline where he feels the company must go.
“The importance of sustainability and climate change is now growing exponentially and no longer incrementally.”
He said it would be the “defining issue” for years to come and he stated the transition to a low carbon environment was critical.
Back then it had announced it was launching a new green products division in line with a commitment to reducing its carbon footprint to net zero by 2050.
One of president Joe Biden’s first acts in office was to restart the process of re-joining the Paris agreement which is a commitment made by nearly 200 countries to help reduce carbon emissions, so that global warming will be limited to just 1.5 degrees Celsius or at least below 2 degrees by 2050.
Aditya Mittal said: “At ArcelorMittal, we have an important role to play in helping society deliver the objectives of the Paris Agreement and are determined to lead our industry’s transition to carbon neutral steel.
“We have the scale, resources and technological prowess to make a significant impact, and have already identified the routes to carbon neutral steelmaking through our Smart Carbon and ‘Innovative DRI pathways’ (replacing iron ore with hydrogen)”.
The company launched its own line XCarb to help customers and position itself as a leading player in this market. Van Poelvoorde called it a “magic moment”.
This, signalled the younger Mittal, “brings the full breath of our decarbonisation activity together under a single umbrella brand.
“It aims to demonstrate to stakeholders the diverse range of initiatives we are undertaking in pursuit of our 2050 net zero goal while also providing our customers with solutions which help them address their own carbon reduction targets, demonstrating the important role steel has to play in a future, circular economy.”
Along with a new industry-wide certification scheme – and independent monitoring – companies would be able to prove their carbon reduction using XCarb – earning green certificates and showing their contribution to the global fight against climate change.
Investing in India had long been a dream of sorts and last year it finally happened.
Lakshmi Mittal himself went to Bhubaneswar in March 2021 to sign an MoU agreement with the state’s chief minister Naveen Patnaik and in association with Nippon Steel.
He also visited Gujarat and Vijay Rupani, chief minister of Gujarat announced that ArcelorMittal was all set to invest £4.93bn in the state, creating a new steel and mining plant there. It shouldn’t be forgotten too that in the summer of 2020 he had donated £3.5m toward the development of a Covid-19 vaccine, and the funds had also helped in the creation of the post professor of vaccinology at the Oxford Jenner Institute – and is currently held by Professor Adrian Hill.
Prior to that he had also donated some £10m to the prime minister of India’s PM Cares Fund to help with fighting the coronavirus outbreak.
Lakshmi Mittal remains executive chairman of ArcelorMittal but the big question is – for how much longer?
Aditya is now the number one to all intents and purposes but probably doesn’t have quite the same clout as his old man…for now, that is.