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ArcelorMittal: steel and mining industry consolidate in the world

25 marzo, 2022
English
Steel Imports from Mexico to the United States: Senators Alert A group of 13 U.S. senators alerted President Joe Biden's administration about the increase in steel imports to the United States from Mexico. According to them, the growth of these imports would be violating an agreement between the two nations signed in 2019. Therefore, they urged the White House Trade Representation (USTR) and the Department of Commerce (DOC) to remedy this breach. Their approach was set forth in a letter signed on February 14 and addressed to Trade Representative Katherine Tai and Secretary Gina Raimondo. The Senators argued that an "unsustainable increase" in Mexican steel imports, particularly steel pipe, occurred in violation of the 2019 U.S.-Mexico Joint Statement on Section 232 steel and aluminum tariffs. The United States lifted its 25% tariffs on Mexican steel imports in May 2019. The previous administration reduced these tariffs as part of an agreement that stipulates that if steel imports "increase significantly beyond historical trade volumes...the importing party may impose tariffs of 25%.... . with respect to the individual product or products in which the increase occurred." Steel imports Since the U.S. lifted Section 232 tariffs, Mexican imports of steel pipe have reached unprecedented levels and Mexico's penetration of the U.S. steel pipe market has more than tripled, while U.S. consumer demand has declined. The Senators assert that the increase in Mexican iron and steel for 2019-2022 is the largest of any iron and steel exporter to the United States. In fact, the volume of Mexico's annual iron and steel imports has increased approximately 73 percent over the pre-Section 232 baseline (2015-2017), imports of semi-finished steel and long products have increased 120 percent, and imports of steel pipe have increased 577 percent. According to the senators, a recent Customs and Border Protection (CBP) investigation revealed that importers misclassified Mexican steel pipe exports, concealing this extraordinary increase. The surge in Mexican steel imports has already contributed to the loss of more than 200 steel jobs in California and has led to the closure of one of less than 12 U.S. mills producing steel pipe. Imports, steel, Mexico, United States, senators, Joe Biden,USTR, DOC, Katherine Tai, Gina Raimondo, Section 232, aluminum, tariffs, Customs, CBP, exports, pipe, pipeline

The steel industry and mining maintained a trend of consolidation in the world during the last three years, ArcelorMittal pointed out.

ArcelorMittal is one of the world’s leading integrated steel and mining companies.

The company is also the largest steel producer in Europe and one of the largest in the Americas, the second largest in Africa and the sixth largest steel producer in the CIS region, and has a smaller but growing presence in Asia.

Prior to 2017, consolidation transactions had declined significantly in number and value in the context of economic uncertainties in developed economies combined with a slowdown in emerging markets.

However, in an effort to reduce global structural overcapacity, some key consolidation steps were carried out in 2021, 2020 and 2019, specifically in China, the United States and Europe.

According to ArcelorMittal, the consolidation of the steel industry in China is aimed at improving international competitiveness, reducing excess capacity, rationalizing steel production based on obsolete technology, improving energy efficiency, achieving environmental objectives and strengthening the negotiating position of the Chinese steel companies in iron ore price negotiations.

Thus, the Chinese government set the goal that between 60 and 70% of steel is produced by the 10 main steel groups by 2025.

ArcelorMittal

In September 2019, Baowu Steel Group and Magang signed an association agreement in which Baowu obtained a 51% stake in Magang, increasing Baowu’s steel production capacity to approximately 90 million tons and representing a major step in the ongoing consolidation of the Chinese steel industry.

Then in February 2021, Baowu acquired a 90% majority stake in Kunming Iron and Steel and consequently increased its steel production capacity to 115 million tons.

Just five months later, in July 2021, Baowu announced that it would take over China’s seventh largest steelmaker, Shandong Iron and Steel, increasing Baowu’s steelmaking capacity to approximately 155 million tonnes.

In another path of consolidation, in August 2021, Ansteel Group and Ben Gang Group, two of the largest state-owned steel companies in northeast China, began the process of merging their businesses to create the third largest steel producer in the world with a capacity of 63 million tons per year.

In India, on December 29, 2020, Jindal Stainless Limited announced a full capital merger with Jindal Stainless (Hisar) Limited. The combined entity will have a capacity of 1.9 million tonnes and is expected to enter the world’s top 10 stainless steel companies and be the largest stainless steel company in India. Closing is expected in the second half of 2022 and is subject to regulatory approvals.

Other mergers and acquisitions

In Europe, on October 29, 2019, Liberty House Group announced a merger with the steel businesses of GFG Alliance to create Liberty Steel Group with a capacity of 18 million tons.

According to the announcement, Liberty Steel Group will be the eighth largest steelmaker outside of China, with operations stretching from Australia to continental Europe, the UK and the US.

In November 2018, ArcelorMittal completed the acquisition (through a long-term lease) of ArcelorMittal Italia, the largest single steel plant in Europe and the only integrated steel company in Italy with its main production plant in Taranto.

The transaction was approved by the European Commission on May 7, 2018 subject to the disposal of certain assets in Italy, Romania, North Macedonia, the Czech Republic, Luxembourg and Belgium, which were sold to Liberty Steel Group in June 2019.

In December 2020, ArcelorMittal signed an agreement with Invitalia to form a public-private partnership, effective mid-April 2021.

North America

In another step toward consolidation in the United States, United States Steel Corp announced on October 1, 2019 that it has reached an agreement to purchase a minority stake in Big River Steel with the option to take full control of the company for four years; and in January 2021, United States Steel fully acquired Big River Steel.

On December 3, 2019, AK Steel and Cleveland Cliffs announced a stock merger that was completed in March 2020.

Additionally, in December 2020, ArcelorMittal sold ArcelorMittal USA operations to Cleveland-Cliffs.

In December 2019, ArcelorMittal and Nippon Steel Corporation («NSC») completed the acquisition of AMNS India through a joint venture agreement and following the submission of a competitive resolution plan setting out a positive future for the bankrupt company, an integrated producer of flat steel and the largest steel company in western India.

 

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