Foreign Company Mittal Steel Acquiring 15% of US Steel Industry

In April 2005, International Steel Group was sold to an Indian investor for $4.5 Billion, representing at least 15% of raw steel production and 40% of flat-rolled steel production in the US. Our foreign dependence on oil is dwarfed by foreign control of our key commodity industries.

Lakshmi Mittal has built a multinational steel empire and will dramatically extend his reach with the acquisition of International Steel Group, which accounts for roughly 15% of raw steel production based on shipment figures from an ISG press release and from The American Iron and Steel Institute

According to author Mark Reutter (as quoted in the Northwest Indiana Times), who wrote "Making Steel," a book about the rise and fall of the American steel industry, after this acquisition Lakshmi Mittal will control roughly 40% of flat-rolled steel production in the US, which Reutter recognizes as core to the Midwest steel industry.

The Northwest Indiana Times article continues with Reutter's assessment: "Mittal will have global control of key parts of the industry," said Reutter.

"He'll own 40 percent of flat-rolled steel production, the heart of the Midwest steel industry. He can raise prices, justified or not; limit production, justified or not. He can exert enormous pressure over governments, and he can move production offshore to the extremely low-cost operations he's gobbled up."

What will the impact on national defense be? According to George W. Bush, the steel industry is vital to the security of this country. On August 26th, 2001, President Bush had this to say:

"If you're worried about the security of the country and you become over-reliant upon foreign sources of steel, it can easily affect the capacity of our military to be well supplied. Steel is an important jobs issue; it is also an important national security issue. I am here to trumpet one of the great values of America. That's the enterprise of the American worker, the hardworking American citizens who make this economy go. And those are the steelworkers of America. I appreciate what you do for our country."

According to the Northwest Indiana Times, 17,000 jobs will be put into the hands of Mittal.

The purchase price for this acquisition is $4.5 billion. This is the same amount of wealth that will flow out of the US in 2.5 days worth of US trade deficit.

Sources quoted in this article:

International Steel Group press release, ISG Announces Record Shipments. 10/7/2004. http://www.intlsteel.com/Press/60.pdf

The American Iron and Steel Institute press release, STEEL SHIPMENTS SLIGHTLY LOWER THAN JANUARY 2004. 3/18/05. http://www.steel.org/news/pr/2005/pr050318_ship.asp

Northwest Indiana Times article, Mittal deal spawns questions. 3/13/05. http://www.thetimesonline.com/articles/2005/03/13/news/top_news/bf53835dc68bae5386256fc30022306d.txt

The American Iron and Steel Institute facts and figures, The New Steel. Backbone Industry in National Defense. http://www.steel.org/facts/defense.htm

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