LN Mittal - Mittal Steel Co.

Concentrating on the production of thin-rolled slabs, the facility, renamed Lazaro Cardenas, became a money machine selling to U.S. markets in Texas and California. Between 1992 and 1998, annual shipments jumped from 929,000 tons to 3 million tons, and output per employee-hour nearly tripled. Moving to London with his wife and two children, Mittal snapped up small-to-middling mills in Canada, Germany, and Ireland. But the heart of his operations remained in so-called “emerging economies.” The boldest example of his strategy was his 1995 purchase of the giant government steel works in Kazakhstan. A product of Soviet state planning (the mill had been established by Stalin with forced labor), Temirtau was a pollution-besotted Goliath with a labor force numbering 83,000. The workers had not been paid for six months, and heroin trafficking and AIDS plagued the company town. Mittal purchased much of Temirtau’s infrastructure along with the mill, including its streetcar system, electric company, and hydropower plant. “People hoped that he [Mittal] would be a rich investor and a rich master and that there would be more aid and assistance,” a resident told Kazakh Channel 31 TV. While workers started receiving their wages on time, they did not see a pay raise, not even after a third of the labor force was dismissed as redundant. The plant was technically purchased by a firm named Ispat International of Rotterdam, Holland. Ispat was formed when the Mittal clan partitioned its family business. Lakshmi formed two companies, Ispat and LNM Holdings, to assume ownership of the foreign steel mills, while his younger brothers, Pramod K. Mittal and V.K. Mittal, took over the steel operations in India that were started by their father. Ispat, which means steel in Sanskrit, was taken public by Lakshmi in 1997 and traded on the Amsterdam and New York stock exchanges. Backed by investor cash from the stock float, Ispat made its first foray into the U.S., buying Chicago-based Inland Steel in 1998. The Ispat/LNM empire swelled after 2002 as more state steel plants became available in Eastern Europe and Africa. By the start of 2005, the Mittal group trailed only Arcelor of Luxembourg as the world’s biggest steel producer. Among its new holdings were Huty Stali (Poland); Nova Hut (Czech Republic); BH Steel (Bosnia-Herzegovina); Ispat Skopje (Macedonia); Ispat Petrotub, Ispat Siderurgica, and Ispat Tepro (Romania); Annaba (Algeria); and a controlling stake in Iscor (South Africa). On the other hand, Mittal shut the steel mill in Ireland that he had purchased in 1996, giving the labor force a day’s notice. The mill was “no longer viable,” Malay Mukherjee, the chief operating officer, said, because of high energy and labor costs and the prospect of installing new pollution-control equipment. Management had earlier called on the unionized workforce for wage reductions, but closed the plant before the union could respond. Many creditors were left with losses after the mill was liquidated. In December 2004, Mittal Steel Co. NV was formed from Ispat and LNM. The company then hopscotched over Arcelor to become the world’s No. 1 steelmaker when it absorbed Wilbur Ross’s International Steel Group (ISG) in April 2005.