ArcelorMittal chairman and CEO Lakshmi N. Mittal has said that his company does not expect demand in the developed world to reach pre-crisis levels before 2015, pointing out that, despite the improvement over 2009, there is still a considerable mismatch between global steel supply and demand, particularly in the developed regions where ArcelorMittal operates a substantial part of its business.
Commenting on the state of the global economy in 2010 in ArcelorMittal's ‘Annual Report 2010', the CEO of the world's largest steelmaker stated that global economic growth continues to be driven by the strength of the emerging markets as gradual global recovery goes on.
Indicating that the US has recorded a slightly stronger growth after the extension of tax cuts and additional stimulus introduced in late 2010, Mr. Mittal stressed that the biggest challenge remains Europe which has essentially split into a two-speed market. He said, "While there has been impressive growth from Germany which has positively impacted surrounding markets such as Poland, Austria, the Netherlands, the northern countries and the Czech Republic, southern Europe remains much weaker as fiscal austerity and high unemployment limit demand, while the export sector is less able to drive growth."
Raw material costs pose additional challenge
Pointing out that the challenging environment in the global steel market has been further worsened by the changes seen in raw material pricing, Mr. Mittal stated that managing such a change in input costs would be a challenge at any time. "Coming as it did in the aftermath of the worst economic crisis in decades introduced a new level of volatility," he indicated.
"All these dynamics mean that even as the recovery continues, we have to remain very focused on ensuring that we are as efficient as possible and have all the right foundations in place for ‘winning in the post-crisis world'," he said.
The CEO revealed ArcelorMittal's four priorities for the future as; investing in the maintenance and upgrading of its facilities where necessary; investing in organic growth, most specifically in developing the company's mining operations and enhancing them in emerging markets; considering selective strategic acquisitions; and using any surplus cash to further reduce net debt.
"We intend to expand our annual iron ore production to 100 million mt by 2015 purely from brownfield development and we are exploring similar opportunities for further developing our coal assets," Mittal stated, recalling the recent acquisition of Canadian iron ore miner Baffinland Iron Mines Corporation, the company's first major acquisition since the economic crisis.
In terms of steel businesses, ArcelorMittal is targeting Brazil and India as the key markets for expansion.