MT Arcelor Mittal New

   By Alistair MacDonald 
 

Lakshmi Mittal built what was until last year the world's largest steelmaker, ArcelorMittal. On Thursday, he tapped his son to take over amid rising domination of the industry by China and growing investor pressure to produce steel more cleanly.

ArcelorMittal said Aditya Mittal, 44 years old and currently the company's chief financial officer, will replace his father as CEO. The elder Mr. Mittal will stay on as executive chairman.

Aditya Mittal's promotion represents a generational change of the guard long in the making at ArcelorMittal, the Luxembourg-based steelmaking giant that is almost 40% owned by his family. He told reporters Thursday that the shift "is much more evolutionary than revolutionary." Lakshmi Mittal said the two had been effectively running the company together.

Aditya Mittal was already helping lead the company's effort to shift production to less carbon-intensive steel and, following the rest of the industry, to manufacturing sites in the developing world.

Raised in India, Lakshmi Mittal laid the foundations of his company with a single steel plant in Indonesia in 1976. He set off on years of acquisitions, mainly in Eastern Europe and the developing world. Mittal Steel became the world's largest steelmaker by production after buying Arcelor, a European conglomerate, in 2006.

The company held that title until last year, when steel analysts said it was overtaken by China Baowu Steel Group Corp. This reflects a long-term shift in steel production away from the developed world. China alone was responsible for 56.5% of global steel production last year, with the European Union, one of ArcelorMittal's largest markets, producing only 7.4% of output, and the U.S. responsible for less than 4%.

The younger Mr. Mittal inherits a company that has reduced the heavy debt load built up over some 45 years of deal making by his father. The company said Thursday that it has net debt of $6.4 billion, the lowest level since the Arcelor acquisition. The company has also shed some of his earlier acquisitions, including the sale last year of ArcelorMittal's U.S. steel business.

The Covid-19 pandemic has hit demand, outside of China, in an industry that was already suffering from low margins amid massive oversupply. The industry also faces growing pressure from governments and investors to shake off its century-old reputation as a smoke-belching industry.

"The biggest challenge of the day is how we lead the decarbonization of the steel industry," Aditya Mittal told reporters. He has promised a shift away from using coal to fuel the steelmaking process towards cleaner fuels like hydrogen. Mr. Mittal said on Thursday that the company is piloting a hydrogen plant in Germany and capturing waste gases at a plant in Belgium.

Write to Alistair MacDonald at alistair.macdonald@wsj.com

(END) Dow Jones Newswires

February 11, 2021 09:18 ET (14:18 GMT)

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