Covid19 has failed to dampen the spirit of Aditya Mittal, president and chief financial officer of ArcelorMittal, the world’s largest steel maker.
A year after steering his father’s dream to set foot in India with the top dollar buy of Essar Steel, Mittal said the “long term potential” of the business remained intact despite the “unparalleled challenges” of the pandemic.
In a letter to the employees of AM/NS (ArcelorMittal Nippon Steel) India, as Essar Steel has now been christened, after completing a year of concluding the Rs 42,000 crore acquisition, Mittal set target for gradual expansion of the capacity while loading up on the inbuilt technology prowess of the parent ArcelorMittal, to make grades of steel hitherto not produced in India.
“Covid has in no way dampened the longterm potential we see for AM/NS India,” Mittal’s letter to the employees on Wednesday read. He may have reason to be hopeful as the company posted its best ever monthly production, 6.2 lakh tonne, at Hazira in November.
“…our longterm production intentions to reach between 12 and 15 million tonnes of annual production still stand. In the shortterm, the focus will be on debottlenecking our existing operations so we can increase annual production to around 8.5 million tonnes,” Mittal, who is the chairman of AM/NS India, wrote.
The acquisition capped the decade long wait of Lakshmi Niwas Mittal, Aditya’s father, to have a meaningful presence in the country where he was born and brought up. Essar’s erstwhile owners, the Ruia brothers, posed every challenge possible to the insolvency process which ran for two and half years.
If the acquisition itself was daunting, the first full year of operation was no less. India went to the strictest lockdown in the world, threatening continuity of the business and the already fragile economy.
But Mittal pointed out that within six weeks after lockdown, which began on March 25, operation at Hazira, Gujarat plant, came back to full capacity by mid May, filling him with optimism for the future.
A report by rating and research agency ICRA said the steel sector witnessed strong revival in the second quarter and the momentum is expected to strengthen further in the second half of 2021. Steelmakers are going to witness the best ever quarterly result in the past several years, the report noted, forecasting that demand contraction for the alloy would be 11 per cent, compared to 22 per cent predicted in April.
Mittal said there would be opportunities to tap into ArcelorMittal’s global R&D to produce high grade steel in India.
“From a commercial perspective, we plan to develop our downstream capabilities, improve our capacity to produce higheradded value auto products as well as introducing other highvalue products from the ArcelorMittal range. This is an area where ArcelorMittal Nippon Steel India can really benefit 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,” he wrote.
Even though Mittal did not mention, there are at least two pending puzzles that the company must resolve. It plans to secure the raw material logistic, taking control of the adjacent port at Hazira, which is under the control of the Ruias, and also secure the iron ore slurry pipeline at Paradip in Odisha. Resolutions to these critical assets will shape the contour of the future expansion of AM/NS India going forward.
