The world's largest steelmaker, Arcelor Mittal, has announced that it will purchase leading Mexican integrated long products producer Sicartsa from parent firm Grupo Villacero for US$1.4 billion.
Sicartsa's two main products are
wire rod and rebars. One of the
rebar mills, Border Steel, is located in El Paso, TX.
Arcelor Mittal also plans to form a joint venture with Villacero to distribute long products in
Mexico and the southern US.
"With the Mexican market expected to grow by up to 6 percent per year over the next 10 years this is the ideal time to expand our presence in this country," Arcelor Mittal CFO Aditya Mittal said in a statement.
Arcelor Mittal expects the acquisition of Sicartsa, which has an annual
production capacity of 2.7 million metric tons, to generate $80 million of industrial synergies and another $50 million in synergies from commercial, procurement and selling, general and administrative activities.
Sicartsa's plant in Lazaro Cardenas is linked directly to its wholly owned
iron ore mine via a slurry pipeline. The
iron ore reserves of this mine are estimated to be around 160 million tons, good for 30 years at current
production rates. Furthermore, Sicartsa shares this
production site with Mittal Steel's
slab casting operation. The
slab caster has a rated capacity of 4.0 million mt annually, making Mittal Steel
Mexico's largest
slab exporter. In fact, both
production sites were at one time one unit and owned by the Mexican government. When it was privatized, it was split into two units and sold to Grupo Villacero respectively to Ispat (the predecessor of Mittal).
In other news related to Grupo Villacero, the company, along with
Germany's CCC Steel GmbH & Co. KG, has announced that together they have acquired a combined 67 percent stake in Pittsburgh-based
rebar distributor Adelphia Metals. Grupo Villacero holds 50 percent of CCC Steel, and both Villacero and CCC Steel each have acquired a one third stake in Adelphia. Since Villacero and CCC are partners, together they will control Adelphia.