Showing its metal
Michał Pakulniewicz: The European Commission has allowed Mittal Steel's takeover of Arcelor. What does the merger mean for Mittal Steel's activities in Poland?
Vijay Kumar Bhatnagar: The European Commission has cleared Mittal's bid to acquire Arcelor subject to certain conditions, one of which involves divesting our stake in a 100-percent-owned [Polish] subsidiary, Bankowa.
According to State Treasury statistics from last year, Mittal Steel Poland's profits fell by 85 percent and revenue decreased by 32 percent. What was the reason for this slump?
2004 was an exceptional year for the steel sector worldwide. By contrast, in 2005 selling prices fell while the costs of raw materials such as iron ores, coal and ferroalloys went up very significantly. At the same time, in order not to disrupt the delicate balance between demand and supply, as well as maintain prices at a reasonable level, the general trend was to keep volumes lower as well.
Back in January, Self-defense spoke of establishing a commission to inquire into the privatization of PHS. Are you concerned that the commission could in fact be formed ?
The Supreme Chamber of Control is in the process of finalizing their report on the privatization of PHS. Hopefully, it will clarify all the issues. In case an inquiry commission is formed, we will certainly follow all established procedures.
Your company exports to 60 countries worldwide. Where are your main markets?
Mittal Steel Poland is very strongly focused on its natural markets, which encompasses countries within a 500-km radius - in particular the Czech Republic, Slovakia and Germany.
What are the main ongoing investments in your new business plan for PHS?
The capacity of the continuous casting machine at Dąbrowa Górnicza Steelworks has been doubled, at a cost zł.480 million, from 1.5 million to three million tonnes per year. A brand new hot strip mill with a capacity of 2.4 million tonnes per year will be erected to substitute the 50-year-old mill. This will have a tremendous impact on Mittal Steel Poland's growth potential. Construction will cost zł.1.15 billion and should be completed by December.
Technical improvements in the new color-coating line project in Świętochłowice, costing zł.104 million, are to be commissioned in November 2006. We are also working on the modernization of the wire rod mill in Sosnowiec The cost of the project is zł.126 million and the commissioning date is set for September 2006.
Have you already completed any investment projects in Poland?
The company has completed a brand new coke-oven battery at ZKZ Zdzieszowice, at a total cost of zł.245 million. We've also finished significant repairs to blast furnace number two in Dąbrowa Górnicza, which costs zł.245 million, as well as many other initiatives.
What effects will these investments have on Mittal Steel's position in Poland?
All these initiatives mean that Mittal Steel Poland will be spending in excess of the committed amount - zł.2.4 billion - by early 2007 rather than by the end of 2009, as had been originally agreed. Importantly, the upgraded investment program will not only allow the company to position itself better against the market requirements but also meet the viability criteria necessary to make it a sustainable and progress-oriented company in the long term.
