The steel industry and mining maintained a trend of consolidation in the world during the last three years, ArcelorMittal pointed out.
ArcelorMittal is one of the world’s leading integrated steel and mining companies.
The company is also the largest steel producer in Europe and one of the largest in the Americas, the second largest in Africa and the sixth largest steel producer in the CIS region, and has a smaller but growing presence in Asia.
Prior to 2017, consolidation transactions had declined significantly in number and value in the context of economic uncertainties in developed economies combined with a slowdown in emerging markets.
However, in an effort to reduce global structural overcapacity, some key consolidation steps were carried out in 2021, 2020 and 2019, specifically in China, the United States and Europe.
According to ArcelorMittal, the consolidation of the steel industry in China is aimed at improving international competitiveness, reducing excess capacity, rationalizing steel production based on obsolete technology, improving energy efficiency, achieving environmental objectives and strengthening the negotiating position of the Chinese steel companies in iron ore price negotiations.
Thus, the Chinese government set the goal that between 60 and 70% of steel is produced by the 10 main steel groups by 2025.
In September 2019, Baowu Steel Group and Magang signed an association agreement in which Baowu obtained a 51% stake in Magang, increasing Baowu’s steel production capacity to approximately 90 million tons and representing a major step in the ongoing consolidation of the Chinese steel industry.
Then in February 2021, Baowu acquired a 90% majority stake in Kunming Iron and Steel and consequently increased its steel production capacity to 115 million tons.
Just five months later, in July 2021, Baowu announced that it would take over China’s seventh largest steelmaker, Shandong Iron and Steel, increasing Baowu’s steelmaking capacity to approximately 155 million tonnes.
In another path of consolidation, in August 2021, Ansteel Group and Ben Gang Group, two of the largest state-owned steel companies in northeast China, began the process of merging their businesses to create the third largest steel producer in the world with a capacity of 63 million tons per year.
In India, on December 29, 2020, Jindal Stainless Limited announced a full capital merger with Jindal Stainless (Hisar) Limited. The combined entity will have a capacity of 1.9 million tonnes and is expected to enter the world’s top 10 stainless steel companies and be the largest stainless steel company in India. Closing is expected in the second half of 2022 and is subject to regulatory approvals.
Other mergers and acquisitions
In Europe, on October 29, 2019, Liberty House Group announced a merger with the steel businesses of GFG Alliance to create Liberty Steel Group with a capacity of 18 million tons.
According to the announcement, Liberty Steel Group will be the eighth largest steelmaker outside of China, with operations stretching from Australia to continental Europe, the UK and the US.
In November 2018, ArcelorMittal completed the acquisition (through a long-term lease) of ArcelorMittal Italia, the largest single steel plant in Europe and the only integrated steel company in Italy with its main production plant in Taranto.
The transaction was approved by the European Commission on May 7, 2018 subject to the disposal of certain assets in Italy, Romania, North Macedonia, the Czech Republic, Luxembourg and Belgium, which were sold to Liberty Steel Group in June 2019.
In December 2020, ArcelorMittal signed an agreement with Invitalia to form a public-private partnership, effective mid-April 2021.
In another step toward consolidation in the United States, United States Steel Corp announced on October 1, 2019 that it has reached an agreement to purchase a minority stake in Big River Steel with the option to take full control of the company for four years; and in January 2021, United States Steel fully acquired Big River Steel.
On December 3, 2019, AK Steel and Cleveland Cliffs announced a stock merger that was completed in March 2020.
Additionally, in December 2020, ArcelorMittal sold ArcelorMittal USA operations to Cleveland-Cliffs.
In December 2019, ArcelorMittal and Nippon Steel Corporation (“NSC”) completed the acquisition of AMNS India through a joint venture agreement and following the submission of a competitive resolution plan setting out a positive future for the bankrupt company, an integrated producer of flat steel and the largest steel company in western India.