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The heat is on - so Mr Steel just expands

Lakshmi Mittal already has a £30billion empire. But this man of steel is still on an expansion drive that includes coal and iron ore deposits, writes Richard Wachman

WHERE DO you start with Lakshmi Mittal? The Indian-born steel tycoon is the wealthiest man in Britain, with an estimated fortune of GBP30bn. He is a friend and confidant of the rich and powerful: Nicolas Sarkozy, Bernie Ecclestone, Tony Blair, Bill Clinton.­

And Mittal is rarely out of the news: last week, he was rumoured to be buying his third property in London's Kensington Park Gardens, dubbed billionaires' row, for his daughter, Vanisha. In India, he is treated as a national icon by an adoring and spellbound media.­

Aged 58, he is still dining out as the man who in 2006 took on and beat the European establishment when he acquired Arcelor, the steel company that was created through the merger of firms from Spain, France, Luxembourg and Belgium.

Its chairman, Guy Dolle, was famously forced to eat his words after controversially dismissing Mittal Steel as 'a company of Indians' paying with 'monkey money'. In the end, Arcelor's shareholders decided to sell out despite opposition to the deal from politicians including former French President Jacques Chirac.

Man of Steel­

The creation of ArcelorMittal, the biggest steel company on earth and now worth over GBP100bn, couldn't have come at a better time: the new group launched into a worldwide commodities boom that has seen steel prices rocket from $240 a tonne in 2002 to $1,000 today.

The new company was the first to produce more than 100 million tonnes of steel a year; that could double in a few years as Mittal goes on another buying spree, extending his empire to Africa, Australia and China.­

'About 10 years ago, Mittal was the visionary who saw that the fragmented international steel industry, serving local markets, was crying out for consolidation,' says a London-based metals analyst.

'Many firms were owned by national governments where the phrase 'entrepreneurial flair' was missing from most people's vocabulary. True, some companies had been privatised, but the sector was poleaxed by chronic overcapacity, high indebtedness and steel prices that had hit rock bottom.'­

Today, ArcelorMittal employs 300,000 people in 60 countries, but accounts for only 10 per cent of global output, so it could grow much bigger before attracting the attention of the anti-trust authorities.

'Certainly, there is the opportunity to grow,' Mittal said recently. 'To what size? You could go up to 150 or 200 million tonnes a year,' he said.­

Size in the steel industry is important because depth makes it possible to capture the economies of scale and geographical reach that help to ramp up production for customers as diverse as car-makers and defence contractors.

Tim Bouquet, co-author with Byron Ousi of a book on Mittal called Cold Steel, says: 'People forget it, but steel is all around us. Even if it is hidden by concrete, glass, brick or paint, it still forms the backbone of our environment and governs the way we live.'

Humble beginnings­

It all began thousands of miles away from Mittal's luxurious home in London — he settled here in 1995, doubtless taking advantage of non-domicile tax status which allows him to escape the Revenue's net on earnings from overseas operations.

The eldest of five children, Mittal was born in 1950 in a small town in India called Sadulpur, in Rajasthan. With some prescience, his parents named him Lakshmi after the Hindu goddess of wealth.­

When he was six his family moved to Calcutta and before long his father was employed at a small British steel company. This gave the family the confidence to set up their own business, but it was tough going.­

While his father laboured night and day to build the new firm, Mittal, a shy and introverted teenager, graduated from a Jesuit college, St Xavier's, where he surprised his parents by excelling at accounting and mathematics. He got the best marks of any student, before or since.

But instead of becoming an accountant, Mittal joined the family business, where, according to Bouquet, he was inspired 'by the massive rollers driven by rubber belts and pulleys that flattened the red-hot steel into bars'.

At the age of 26, he set up his first steel mill, in Indonesia, producing 26,000 tonnes and generating annual profit of $1m, serious money in those days.­

But he soon realised, says Bouquet, that steel would 'have to go global, just like car manufacturers, shipbuilders, iron and coal producers'. He bought companies in Canada and Germany, but still wasn't making waves. And then came Kazakhstan.­

In the clapped-out former Soviet republic, larger than Western Europe and on the brink of bankruptcy, Mittal bought the country's Karmet Steel works in Temirtau for the knockdown price of $400m.

Kazakhstan shared a border with China, where demand for steel was about to take off, and the acquisition would soon pay for itself many times over, propelling Mittal into the big league of international steelmakers.­

He brought in Indian managers, doubled production and sold into the booming markets in the East. With luck, as well as judgment, he rescued Kazakhstan from ruin and paved the way for further large- scale acquisitions.­

Family ties

Few people are close to Mittal, except his immediate family. When his son and heir, Aditya, left home to attend Wharton Business School in the US in the mid-1990s, Lakshmi was so distressed that he could not bring himself to see him off at the airport.­

Mittal is proud to be Indian, but he considers himself a 'global citizen'. Despite his immense wealth — his family's 44 per cent stake in ArcelorMittal worth GBP24bn — he doesn't seek the limelight: you won't see him at Ascot, Wimbledon or the Proms, although he does attend football matches, after buying 20 per cent of London club QPR, where Formula 1 supremo Bernie Ecclestone is also on the board.­

Someone who knows Mittal says: 'He is impressive, not loud or egotistic. If anything, he is understated, but very focused.'­

But Mittal has attracted criticism: 191 people have died in accidents in the past 12 years at his Kazakhstan operations, where campaigners argue that more money should have been spent on safety measures. The company has strongly rejected allegations of negligence, but earlier this month earmarked an extra $1.2bn for improvements.­

In Britain, Mittal has given money to the Labour party but ran into controversy in 2001 when he gave the party GBP125,000 just before the general election, allegedly in exchange for a letter from Tony Blair to the Romanian government supporting his bid for a Romanian steel plant. Both denied the allegation.­

With the resources boom showing no signs of abating, Mittal is plotting his next move. He wants to secure deposits of coking coal and iron ore, which have doubled in price in the past four years and which are vital for the production of steel. He is in talks to acquire coal mines in Australia and Russia, while expansion elsewhere means that ArcelorMittal now meets 45 per cent of its iron ore requirements from its own supplies.­

Mittal has also invested in shipping and rail to cut transport costs. The only part of the supply chain that remains outside his control is oil and gas: an area, perhaps, that could attract his attention before too long.­

All about Mittal

Name: Lakshmi Niwas Mittal­

Born: 15 June, 1950 in Sadulpur,­ Rajasthan, India­

Education: St Xavier's College, Calcutta­

Career: Founded Ispat (Sanskrit for steel) with his father in the mid-1970s. Hit the acquisition trail by investing in Indonesian steel mills; bought plants in Trinidad, Kazakhstan, Germany, the US, South Africa, France, Luxembourg and Ukraine. Created Mittal Steel in 2004 via a takeover of his private company, LNM, by his public one, Ispat. Merged with Arcelor in 2006 to form ArcelorMittal, the world's largest steelmaker­

Interests: Football, swimming and yoga­

Family: Married with two children. Son Aditya is chief financial officer of ArcelorMittal­

Nickname: 'Carnegie of Calcutta' after the 19-century American railroad tycoon