ArcelorMittal, Nippon Steel Acquire Alabama ThyssenKrupp Plant

Companies will target the North American automotive sheet market.

December 3, 2013

ArcelorMittal, based in Luxembourg, and Nippon Steel & Sumitomo Metal Corp. (NSSMC), Toyko, have entered into a 50/50 joint venture partnership to acquire ThyssenKrupp Steel USA (TK Steel USA) from ThyssenKrupp for $1.55 billion. TK Steel USA is a steel processing plant located in Calvert, Ala., with a total annual capacity of 5.3 million metric tons. The facility includes hot rolling, cold rolling, coating and finishing lines.

The transaction is subject to the approval of regulatory authorities in the United States and a number of other countries.

The transaction includes a six-year agreement for ArcelorMittal and NSSMC to purchase 2 million metric tons of slab steel per year from ThyssenKrupp CSA, an integrated steel mill in Rio de Janeiro, Brazil. TK CSA has an option to extend the agreement for an additional three years at more favorable terms to the joint venture.

The Brazilian steel mill has an annual production capacity of 5 million tons of slabs. The deal will secure at least 40 percent capacity use at the plant to ArcelorMittal and NSSMC. TK adds that the deal, along with stronger penetration of the slab markets in South and North America, will increase the plant's capacity use.

The remaining slab balance needed at the Calvert plant will be sourced from ArcelorMittal plants in the United States, Brazil and Mexico. ArcelorMittal also will be responsible for marketing the product on behalf of the joint venture.

The goal of the joint venture, the partners say, is to serve the automotive sheet market in North America, especially in the southern U.S. A press release from Nippon Steel says the joint venture will provide the company with the capability to meet the growing needs, especially from Japanese car manufacturers, for ultra-high-tensile-strength products with good formability and hot-rolled steel products including high-tensile-strength grades.

Commenting on the acquisition, Lakshmi Mittal, chairman and CEO of ArcelorMittal, says, “This is an important strategic acquisition for ArcelorMittal. The Calvert plant is the most modern finishing facility in the world. It ideally complements our existing operations in the United States and the Americas, and will improve our ability to supply customers in the automotive and other markets in the Southern United States, where we do not have comparable facilities today. We have worked successfully with NSSMC in other joint ventures in the U.S. for years and look forward to extending the collaboration.”