Singapore: The world’s top steel maker, ArcelorMittal, said on Wednesday that it wants to supply up to 70% of its own iron ore needs by 2012 to mitigate against rising raw material prices.
This would lift its self-sufficiency of the iron feedstock from 45% now, as the company seeks to raise its steel production 18% to 130 million tonnes per year by 2012.
“Today we have under our control over 10 billion tonnes of iron ore. Our first priority is control. We want to be in charge of the destiny of the product,” Malay Mukherjee, a member of ArcelorMittal’s six-person group management board, said in an interview.
He said these raw material expansion plans could be achieved with additional investments. Most of this growth will be organic, he said, through expansion of ArcelorMittal’s existing operations in emerging markets such as China, Russia and Brazil. The company is also planning greenfield expansion in India.
Iron ore prices have rocketed, gaining about 70% in the 2008-09 contract year, amid strong demand for steel.
The company is also looking for acquisitions, Mukherjee said, but he acknowledged that this could get more difficult due to antitrust regulations as ArcelorMittal grows.
The company, which was formed in 2006 through a merger of Arcelor and Mittal Steel, the world’s top two steel makers at the time, now controls more than 10% of world steel production.
By contrast in the raw materials sector, Cia. Vale do Rio Doce, Rio Tinto Group and BHP Billiton Ltd control more than two-thirds of the world’s seaborne iron ore trade.
Mukherjee declined to confirm a UBS AG report on Tuesday that ArcelorMittal had agreed an increase of 220% for high quality hard coking coal with mining group BHP Billiton for 2008 contracts.
But he acknowledged that coal at $300 (Rs12,000) per tonne was “possible”.
Mukherjee will step down as head of the firm’s mining and emerging market steel-making operations in May and join its board of directors.