Consolidation between mining companies may be a cause for concern for the steel industry but the world’s biggest steelmaker ArcelorMittal is planning to go on the overdrive in search of iron ore mines.

The $105 billion company intends to produce 85 per cent of its steel through its own captive resources by 2014.

“Our business model going forward is to enhance backward linkages in our steel plants and decrease our dependence on mineral imports,” said Rony Stefano, corporate finance and investor relations manager with ArcelorMittal Brazil.

“Currently, 46 per cent of our ore requirements is met through our captive mines and we plan to increase this to 75 per cent by 2010 and 85 per cent by 2014.”

For which, the fight is going to be on the mining front, against global mining majors, where currently a global consolidation is underway. The $20 billion Vale (formerly CVRD) is in talks with the $27 billion Xstrata Group for a possible merger. The $48 billion BHP Billiton made a hostile bid to acquire the $26 billion Rio Tinto last month. Between them, Vale, BHP and Rio Tinto control almost 80 per cent of the global iron ore market.

But ArcelorMittal is readying to take them on. “We are looking at becoming self sufficient, which would insulate us from sporadic hikes in mineral resource prices,” Stefano said. “Even if steel prices go up as a result of this, the increase will only add to our bottomline. And when there is a mad scramble for mines, with our diversified operations spanning steel plants from Indonesia to South America, we will always be in a position of strength while bidding for a new mine anywhere in the world.”

... contd.