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Steel Industry Diagnosis

MCI Appraisals: Value creation opportunities

CompanyCountryStrategic opportunity
AnshanChinaMerger with Fujian Sanming Iron and Steel Group
ArcelorMittalLuxembourgSale of selected Central European steel assets. Mine safety improvements in Eastern Europe. Longer-term downstream pursuit of construction markets, including building design / fabrication / distribution / erection jv's in Asia
AscometalFranceGet away from dependence on European auto sector by geographic diversification to high growth auto markets and know how transfer. Further near-term rationalisation of production sites in Europe required also.
AzovstalUkraineLeverage of cost advantage / strategic localisation through regional M&A
BaosteelChinaSteelmaking capacity of 50 mt/year by 2012 and 66 mt/year by 2015
BlueScope SteelAustraliaDisposal of downstream cold rolling / coating ventures [Asia Coated Product Operations] in Thailand and Indonesia; perhaps also of North Star joint venture in the USA to a large CIS steel group
Bohler UddeholmAustriaSpecial steels opportunities in Eastern Europe
Cleveland CliffsUSACorporate governance issues
CorusUKLong term exit from iron ore based steelmaking in UK. Purchase of semis for UK with more emphasis on downstream development / value added / EAF process route
DneprospetsstalUkraineEnvironmental performance improvement, especially airborne emissions
ErdemirTurkeyCreation of Black Sea Steel Group
Evraz HoldingsRussiaFront end modernisation, including Nizhny Tagil open hearth furnace closure
GazmetalRussiaCreation of a leading Euroasian iron-ore and steel alliance
GerdauBrazilExpansion of engineering steel production [SBQ steel] in new geographies beyond Brazil and Spain
GIICBahrainMiddle Eastern partnership to create Brazilian iron ore supply deal
GSHLNigeriaLong-term start-up of Ajaokuta driven by medium-term ramp up of downstream production
IlyichUkraineOHF closure; investment in continuous casting; downstream mill modernisation
Industrial Union Donbass, IUDUkraineIron ore supply partnership
IsdemirTurkeyConsolidation of Turkish long product sector
KremikovtsiBulgariaReorientation to higher value downstream steel processing; under new ownership perhaps?
MarcegagliaItalyPurchase of East European flat rolled plant - for in-house supply of hot rolled steel coil
Magnitogorsk Metallurgical Kombinat [MMK]RussiaReorientation to (higher value) flat products
Mittal Steel Krivoy Rog [formerly Krivorozhstal]UkraineSwitch (perhaps just partial initially) from long to flat hot rolled products, making use of local iron ore for the production of higher quality steels
Mittal Steel Termitau [formerly Karmet]KazakhstanThe priority need seems to be mining health and safety improvements
Nippon SteelJapanMerger is planned with Sumitomo Metal Industries and is scheduled to take place in October 2012. Presumably this will then be followed by facility rationalisation and internal restructuring
NLMKRussia22 million tonnes of Russian crude steel output by 2015
NucorUnited StatesUpstream emphasis on iron unit sourcing. Downstream continuation of pursuit of opportunities in construction
OutokumpuFinlandExpansion of Tornio facilities for CIS / Asian markets
POSCOKoreaPursuit of international ventures especially in Vietnam, Laos, Cambodia; acquisition of [or much closer production oriented collaboration with] Vietnamese steelmakers; active development of stainless steel production potential for SE Asian markets
RautaruukkiFinlandSwitch to cleaner steelmaking at Raahe. Expansion into pre-fabricated building markets / construction supplies, driving South
RivaItalyEuropean merger
RusSpetsStalRussiaConsolidation of Russian stainless steel production assets (beyond Red October) to form a 'Special Steel Holding' involving mutliple suppliers
SAILIndiaPurchase of coking coal assets outside India [maybe Australia?]
SeverstalRussiaSale of Severcorr and other North American assets [e.g. to CSN] to help with debt repayment. In Europe, conversion perhaps of Lucchini Piombino facility to EAF steelmaking
ShougangChinaReverse takeover of Tangshan to form dominant 25 million tonne steelmaking Group
SumitomoJapanSee entry under Nippon steel above
System Capital ManagementUkraineIron ore price control through dominance (via MetInvest / Smart) of Ukrainian supply
Tata GroupIndiaDevelopment of global assets, capabilities and brands. Much deeper integration of Corus with slab sourcing from Jamshedpur plant in India and / or from new greenfield steelmaking facilities in African continent [e.g. Liberia] fed by local iron ore and low cost local gas
ThyssenKruppBrazilCoking coal and iron ore pellet supply issues
ThyssenKruppGermanyJoint ventures / partnerships looking East
TISCOChinaMelt shop upgrade & capacity expansion; reorientation to special steels
Trinecke ZelezarnyCzech Republic Upstream integration with Moravia Steel
U.S. SteelUSA Acquisition led business growth and / or greenfield investment in South America
ValeBrazil Investment in steel plants in Brazil with emphasis on local addition of value to domestically produced iron ore
VoestalpineAustriaGrowth beyond 500km hinterland - development of larger scale via greenfield Central or East European CSP plant, possibly in the Black Sea region
WuhanChinaMerger with Panzhihua Iron and Steel
ZaporizhstalUkraineClosure of Siemens-Martin OHF furnaces - steel shop modernisation to BOF steelmaking

To discuss these or any other strategic options, please contact MCI.

We charge Euro 200 for a short consultation (up to 15 min by phone) or Euro 1000 for a short written report including a SWOT diagnosis covering any single firm in the list shown above.

The appraisals above cover expected plans / opportunities for performance improvement or strategic turnaround as identified by MCI around Q2 2013. The opportunities as shown do not necessarily concur with management plans. Indeed, in most cases the ideas shown are those of MCI, written by MCI from our own deliberations about company strengths, weaknesses, threats and opportunities without Board or Management consultation. The SWOT analyses behind each of these analyses, together with a short explanation of the underlying strategic reasoning can be supplied at a small cost. For further information, please contact Metals Consulting International by email or call +44 775 149 0885.