ECONOMY

ArcelorMittal set to invest in Turkish $500 million joint venture

ISTANBUL – ArcelorMittal, the world’s largest steelmaker, said it will form a 50/50 joint venture with Turkish peer Borusan to build a new hot strip mill in the country, involving an investment of $500 million. The news helped send shares in rival Turkish steelmaker Erdemir down more than 7 percent, underperforming a 4 percent fall on the main Istanbul index, as investors perceived a threat from the new joint venture. ArcelorMittal Executive Board Member Michel Wurth also said ArcelorMittal had no plans for joint initiatives with Erdemir, which Turkish group Oyak bought in a privatization after ditching a plan to buy it in partnership with Arcelor. Wurth told Reuters in an interview the firm was focusing expansion on fast-growing markets – Turkey is seen growing 5 percent this year – especially Poland, Romania and Ukraine. ArcelorMittal said the new plant in Turkey was expected to be operational by the first half of 2010 and have a capacity of 4.8 million tons. «The Turkish steel market is strong and expected to grow at a yearly rate of at least 6 percent over the next 10 years,» Wurth said. The joint venture will reach full capacity by 2012 and the company’s share of the domestic flat steel market would be 20 to 25 percent by 2015, Borusan’s chief executive, Agah Ugur, said. At full capacity he expected an annual revenue of $3 billion. The joint venture, subject to regulatory clearances, would supply Turkey’s large automotive sector and general industry and 15 percent of production would be exported. Wurth also told Reuters he expected European steel demand to grow a bit less next year than in 2007. World steel industry association IISI forecast earlier this month that global steel consumption would rise 6.8 percent in 2008. «European consumption is good but the European market is suffering from exports from China, that’s why inventory went up a bit in Europe. European steel demand will grow next year a little bit less than in 2007,» Wurth said. European steelmakers want to limit cheap Chinese steel imports. «I expect the first anti-dumping case will be filed to the EU Commission within the next week, and we expect positive measures from the Commission, as it is well aware of this situation,» he said, without elaborating. He declined to give details on price expectations, saying only that he expected iron ore and steel prices to rise in 2008.