ArcelorMittal is spending $5bn to double the output of its plant in Kazakhstan in a further expression of confidence by the world’s biggest steelmaker in the likelihood of robust economic growth outside the main developed regions.
Some $1.2bn of the investment is geared to improving health and safety at the steel plant in Temirtau and associated coal and iron ore mines.
This is an area in which the company has admitted it has fallen short after a series of serious accidents in which 191 people have died in the past 12 years in its Kazakhstan operations – which employ nearly 50,000 people.
Under the expansion plan, annual output from the plant will rise from just under 5m tonnes last year to about 10m tonnes.
ArcelorMittal says the project could be finished as early as 2013.
However, if world demand for steel starts to falter, or if the project hits delays as a result of hold-ups instigated by the Kazakhstan government, the date of completion could be put back to 2017.
The $5bn projected cost is an estimate based on a completion date of about 2015.
Christophe Cornier, an ArcelorMittal executive with responsibility for Kazakhstan, said steel consumption in the region should experience “strong growth” in the next few years.
ArcelorMittal is projecting that one third of the increased output from the plant will be sold to customers based in Kazakhstan.
The rest will be exported – with a large quantity going to China, by a long way the world’s biggest market for steel.
China is where Arcelor-Mittal has as yet only a minimal presence in terms of production and sales.
The Kazakhstan project, announced yesterday, fits in with an umbrella plan outlined last autumn by Lakshmi Mittal – chairman and main owner of ArcelorMittal to spend $35bn by 2015 on increasing the company’s steel and mining output, with most of the investment earmarked for the developing regions.
Of the $35bn, some $20bn is scheduled to be spent on two large new steel mills, along with coal and iron ore mines, in India.
The Kazakhstan project has particular significance for Mr Mittal, since the Temirtau plant was one of the first large steel facilities he purchased in the mid-1990s from former communist governments as part of a rapid growth phase by his company.