A couple of weeks back, we covered ArcelorMittal’s takeover of Italy’s Ilva, Europe’s largest producer of flat-rolled carbon steel. We observed at the time that ArcelorMittal was one of a few firms capable of funding the cleanup and modernization of Italy’s polluting giant.
But Ilva’s takeover comes at a price for ArcelorMittal. It’s more than just financial — this is strategic.
The European Union’s competition commission has ruled that their price for ArcelorMittal’s successful takeover of Ilva is the steel company must divest itself of four European steel plants to avoid an overly dominating position in the marketplace.
The firm that has negotiated preferred bidder status is our old friend Liberty House, owned by Sanjeev Gupta. We say “old friend” only in the sense we have written about Liberty House (or its parent company, GFG Alliance) on several occasions in the past, including when they picked up assets once owned by Tata Steel and, more recently, when they bid for Rio Tinto’s 280,000-ton-per-year aluminum smelter in Dunkerque, France.
GFG is becoming a major force in the production of both steel and aluminum in Europe, riding a wave of robust demand for both materials.
ArcelorMittal’s steel plants are all said to be profitable, comprising a major integrated works at Galati in Romania and Ostrava in the Czech Republic, along with rolling mills at Skopje in Macedonia and Piombino in Italy, with a total rolling capacity of some 8 million tons a year.
The acquisition will take Liberty to nearly 15 million tons per annum of capacity, encompassing a full range of finished steels that includes: plate, hot-rolled coil, cold-rolled coil, galvanized sheet, tin plate, bar, wire rod and rail. The plants already serve both domestic and wider European markets, including automotive, construction, industrial machinery, and the oil and gas sectors. These four plants will double Liberty’s capacity and push it into the big league of European producers.
No price has officially been put on the deal yet, as negotiations are ongoing, but Gupta is fast positioning himself as yet another Indian-origin entrepreneur of significant ability — let’s hope he maintains his focus on the metals industry and doesn’t wander off the turf he knows best.