Arcelor Mittal (MT)

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Top Contributors Mark Rossetti Related Articles Steel industry

The company is vertically integrated, mining 46% of the iron ore and 13% of the coal that it uses [Morningstar]. This partially insulates the company from rising iron ore prices.

ArcelorMittal makes frequent acquisitions in order to expand its business. This allows them to grow faster than simple organic growth, but also creates the risk of poorly integrating new acquisitions into their existing business.

The company formed upon the merger of Arcelor and Mittal Steel, the firm of billionaire Chairman and CEO Lakshmi Mittal. The market capitilization of the firm is $144.37 billion.

[edit] Business Financials

ArcelorMittal is the world’s largest steel producer. Furhtermore, it is the largest regional steel producer in the Americas, Africa, and Europe. The company shipped 110.5 million tons of steel in 2006 [20F Business Overview, 32] and 116 million tons in 2007.

[edit] Key Trends & Forces

Raw Materials Prices Affect Costs ArcelorMittal consumes several resources with volatile prices, such as iron ore, coal, and scrap metal. ArcelorMittal produces 46% of its own iron ore and 13% of its own coal, but must buy the remainder from outside suppliers. Increasing demand for iron ore, especially by China, drove ore prices up by 71.5% in 2005 and 19% in 2006.

Mittal Steel Has Grown Rapidly Through Acquisitions Mittal Steel has grown rapidly through a number of acquisitions, including ISG in 2005, Arcelor in 2006, and Sicartsa in 2007. This has made ArcelorMittal the world’s largest steel manufacturer, but has also created the risk of not properly integrating these new acquisitions efficiently. At the times of acquisition, ArcelorMittal estimated that its acquisitions of ISG and Sicartsa would result in total annual operations savings of $380 million. [20-F, RF 11-12]

Emerging Markets are a Major Source of Revenue Strong construction industries China, India, Brazil, and other emerging markets account for

Rising Transportation Costs Due to Increased Gas Prices

[edit] Competition

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