The world's largest steel producer ArcelorMittal is reported to be assessing a joint venture spin-off of its stainless steel business which is worth US$3 billion.
Lakshmi Mittal, owner of ArcelorMittal, is said to be considering whether the group's expansion might have gone too far, taking into account that the economic downturn may leave the steel industry characterized by overcapacity for years to come.
According to the reports, ArcelorMittal is evaluating different options relating to its stainless steel business, but has no intention of disposing of the business completely.
One of the companies with which Mr. Mittal has discussed a possible joint venture is the world's sixth biggest steel company from South Korea, POSCO, which has a large stainless steel division. However, according to reports, POSCO has said that it was "not reviewing" ArcelorMittal's stainless steel operations "at this stage."
Meanwhile another candidate is reported to be one of the Europe's leading stainless steel companies, Outokumpu from Finland. However, Outokumpu has not commented on the issue.
ArcelorMittal has expanded on the back of acquisitions including the €26.9 billion purchase of Luxembourg-based Arcelor in 2006. Almost all of ArcelorMittal's stainless steel business, with plants in France, Belgium and Brazil, were acquired as part of Arcelor. The company's stainless steel business employs about 11,000 people and is likely to suffer a loss this year. The unit had sales of $8 billion last year, with earnings before interest, taxation, depreciation and amortization of US$900 million.