Mittal Steel eyes Liberia

Staff -- Purchasing, 10/6/2005

Mittal Steel, the world's largest steelmaker, may spend $900 million on building iron-ore mines, railways and port facilities in Liberia, seeking to secure supplies of key raw material supplies for its mills. Mittal Steel currently sources about 40% of its iron ore in mines from Kazakhstan to Bosnia. The Rotterdam-based firm has access to more than 1 billion metric tons of iron-ore reserves in the West African nation.

Liberia's National Transitional Legislative Assembly ratified the Mittal Steel mineral development agreement in mid-September. The members hope the mining deal will pave the way for a Mittal Steel Liberia plant.

In a statement e-mailed to the media, Mittal Steel's President and CFO Aditya Mittal, says "this project will help us reduce our dependency on third party iron-ore supplies.'' Contract iron-ore prices have risen by about 70% this year. Steelmakers are concerned that future expansion of raw steel will keep world iron ore demand and prices high while finished steel continues its history of erratic price rises and falls.

Analyst Damien Hackett at Canaccord Capital of Canada, believes global steel production will rise by 3.8% annually through 2010—so that world demand for iron ore imports will increase by more than a third between 2004 and 2010, to 903 million tons.