ArcelorMittal launches $1 bn cost saving plan

ArcelorMittal has embarked upon a "asset optimisation plan".

Amid global slowdown that is putting pressure on revenues,steel giant ArcelorMittal has embarked upon a “asset optimisation plan” to save costs to the tune of USD 1 billion (about Rs 4,900 crore) by December 2012.

As per the plan,the world’s largest steelmaker would “move production from high cost plants to low cost plants across the world,” the company’s India spokesperson said,adding that some blast furnaces will be kept idle while some other units will run at full capacity.

“The blast furnaces lying idle will be restarted as and when local demand picks up,” the spokesperson added.

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“The shift in production from high cost facilities to low-cost facilities give us the lowest cost footprint and will result in annualised cost saving of USD 1 billion by December,2012,” the spokesperson further said.

Early this week,company chairman Lakshmi Mittal had said in Paris that he remains “cautiously optimistic” about the growth in global steel demand in 2012 and pegged it to average between 4.75 per cent and 5.25 per cent.

With a presence in more than 60 countries,the company is a market leader in all major global carbon steel markets,including automotive,construction,household appliances and packaging.

According to its website,the company had produced 90.6 million tonnes in 2010,representing approximately 6 per cent of world steel output. The company had also reported revenues of USD 78 billion last year.

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“The company believes that steel demand is recovering and even though the company remains cautious in its outlook,it remains fairly certain that the production will increase slightly this year and in 2012,” the spokesperson said.

Moreover,the company is looking at India and Brazil as its “growth targets”,the spokesperson said,adding,”This realignment does not impact our proposed investments in India. The country remains the growth target for us”.