A year of ArcelorMittal Nippon: A 'new type of steel company' in the works

Firm claims Covid has had no long-term impact, growth plans are on track and target of reaching 12-15 million tonne output remains

The Covid-19 pandemic has in no way dampened the long-term potential for ArcelorMittal Nippon Steel (AM/NS) India and growth plans are on track, the company’s chairman, Aditya Mittal, indicated in a communication to employees on the occasion of completion of a year of operations on Wednesday.

ArcelorMittal had fought a pitched battle to acquire Essar Steel, one of the 12 non-performing assets (NPAs) mandated for resolution by the Reserve Bank of India (RBI) under the Insolvency and Bankruptcy Code (IBC); the acquisition was made jointly by ArcelorMittal and Nippon Steel Corporation. 

In the joint venture, ArcelorMittal holds 60 per cent and the balance is with Nippon Steel.

Mittal’s letter to the employees mentioned, “Covid has in no way dampened the long-term potential we see for AM/NS India. India is a growing, resilient economy and it will bounce back – of this I have no doubt. Over the last year, I have become even more convinced about the potential, because I know the company and its assets better, but really because I know you, the people better.” 

 

Amid a “challenging” year, what Mittal said, was more than could have been imagined when the deal was completed, AM/NS recorded a strong operational and financial performance. 

There was a slowdown following the March lockdown, but with the easing of lockdown measures, full production levels were achieved by mid-May; in November, AM/NS managed to set a new monthly production record. 

On the sales and marketing side, the national network of retail outlets, Hypermart, was extended, and two new high-strength steel brands, Stallion and Maximus, were launched. 

The long-term production target of 12-15 million tonnes of annual output still stand, Mittal said. 

“In the short-term, the focus will be on debottlenecking our existing operations so we can increase annual production to around 8.5 million tonnes. We are currently working on further growing our production, and I expect, we will be able to provide some further details on how we plan to do this next year,” Mittal said.

 

At the time of acquisition, AM/NS India had a crude steel production of 7.5 million tonnes. Mittal, however, pointed out that while scale was important, there were several other areas to focus on and many opportunities to explore.

From a commercial perspective, the plan was to develop downstream capabilities, improve capacity to produce higher-added value auto products as well as introducing other high-value products from the ArcelorMittal range. 

Mittal believed, in this area, AM/NS India could draw in benefits from its parent companies, ArcelorMittal and Nippon Steel. 

“When it comes to technological prowess, innovation and R&D, I truly, believe our capabilities are unmatched in the global steel industry. This provides AM/NS India with a real competitive advantage and a powerful tool to draw on as we implement the strategy to achieve our vision of becoming a new type of steel company for India,” he added.