ArcelorMittal shelves investment plans on tough economic condition
New Delhi: Global steel giant ArcelorMittal has decided to curtail Mergers and Acquisitions (M&A) and new investment activities following tough economic and market conditions. The world's largest steelmaker will now focus on asset optimisation and sale of non-core assets.
"Due to difficult economic and market conditions, ArcelorMittal has curtailed M&A and greenfield investment activity," NRI billionaire Lakshmi Mittal-led company said in its latest annual report. ArcelorMittal, which was created after an over $30 billion merger of Mittal Steel and Arcelor in 2006, said its focus is on improving its costs through management gains programme, non-core asset disposals and resizing operational footprint through asset optimisation.
The company has continued to dispose of non-core assets and sold its minority shareholding in Gestamp as part of this strategy. Earlier, it disposed of Gallatin, Circuit Foil Luxembourg, ATIC and its steel cord business. The company in its latest annual report said that with a proven track record in acquisitions and turnarounds, it takes a disciplined approach to investing and uses teams with diverse areas of expertise from different business units across the company to evaluate new assets, conduct due diligence and monitor integration and post-acquisition performance.
"In particular, ArcelorMittal seeks to improve acquired businesses by eliminating operational bottlenecks, addressing any historical under-investments and increasing capability of acquired facilities to produce higher quality steel... ArcelorMittal believes that these operating and financial measures have improved the operating performance and quality of steel produced at such facilities," it said.
In February 2016, the steel giant had announced its Action 2020 plan which targets an improvement in operating income by $3 billion. The steel giant last month proposed new $6.5 billion steel project in Karnataka and said that it may set up a solar farm on land alloted for the 6 million tonnes (MT) steel project. The company has entered into a pact with the Karnataka government for setting up a 6 MT steel plant with a captive 750 MW power plant at an estimated investment of $6.5 billion.