Arcelor-Mittal Case Study

Arcelor-Mittal is an integrated steel and mining company. Many think that the company was formed in the United States of America, but the fact is that the company was organized and registered in Luxembourg. The company’s article of association highlights those facts. The company is registered as a public limited liability company (“Societe Anonyme”) in Luxembourg, and the corporate purpose of the company is to manufacture, process, and market steel to the general public.

History

The name Arcelor-Mittal came to prominence as a result of the merge between two giant steel companies. In other words, looking at the history of the company will mean to look at the history of the two individual companies that emerged as one. Arcelor S.A. is a Luxembourg
The chart below shows some of the merge that both companies went through before becoming one company.

Figure 1: Arcelor-Mittal Merges to date
Vision/Mission

Arcelor-Mittal pride itself to be the leading steel company in the world; and when you look at the quantity of steel they produce per annum and their annual revenue, it supports their claim. The company’s vision is clearly highlighted in their website. They are the leader in many major global markets, which includes but not limited to construction, household appliances and automotive. Their strategy is to operate under a core value of sustainability, quality, leadership and entrepreneurship. The company has five key areas which they believe is critical to implanting their strategy:
• Strong balance sheet to allow future growth
• Active Management to maximize value
• Decentralized organizational structure
• Obligation to act
This decline can be associated with a drop in steel consumption, which includes high property drops in the housing construction in China. Property construction alone fell 18.6%, the fourth consecutive period of decline , while the general consumption of steel fell 3.4% in 2013 to 738.3 million tonnes in 2014 . Many analysts believe that the steel output in China will shrink more this year because they believe that demand has reached its peak. Prediction of a decline to 814 million metric tons in this year (2015) from 823 million tons last year is expected . See Appendix A for steel usage in Megatonnes (Mt) by region. These numbers highlights a major concern for Arcelor-Mittal. With China’s current weak steel demand, the company must strategically plan to meet consumer needs elsewhere. North Africa and the Middle East comes to mind. A recent report shows that these two regions will see steel consumption grow 4.9% . In order to remain on top and be competitive in the steel market, the company must consider investing other emerging markets.

Market Trend

Arcelor-Mittal need to understand demand distribution for its steel product. How trends are shifting in the steel industry, and try to identify opportunities to improve its business.

Figure 3: Returns for Arcelor-Mittal and Other Steel