Lakshmi Mittal: From Small Steel Plant to World's Biggest Steel Empire

Some people trade commodities. Some people build entire industries. Chapter 25 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Lakshmi Mittal, a man who spent three decades buying steel plants that nobody wanted and turned them into the largest steel company the world has ever seen.

A Steel Family in Rajasthan

Mittal grew up around steel. His father ran a small steel plant in Rajasthan, India. Not a big operation. Just a family business in a developing country. Lakshmi learned how the business worked from the inside. The furnaces, the costs, the margins. He understood steel the way a farmer understands soil.

In 1976, he took his first big step. He went to Indonesia and took over a rundown steelwork. The plant was in bad shape. He modernized it, cut costs, made it profitable. And right there, at 26 years old, he found the playbook he would use for the rest of his career. Find a steel plant that is losing money. Buy it cheap. Fix it. Repeat.

The Shopping Spree for Broken Steel Plants

Here is where Mittal’s story starts to feel like a pattern on repeat. He kept finding steel plants in terrible condition, in countries going through economic chaos, and he kept buying them for fractions of what they originally cost to build.

In 1989, he bought a derelict steel plant in Trinidad and Tobago. Nobody else wanted it.

In 1992, he bought a state-owned Mexican steel operation for $220 million. The Mexican government had invested $2.2 billion building it. So Mittal got a two-billion-dollar plant for a tenth of the price. The government was happy to get rid of it because they were losing money every month keeping it running.

In 1995, after the Soviet Union collapsed, he bought Karmetwerk in Kazakhstan for $400 million. Post-Soviet industrial assets were selling for pennies. Factories that had employed entire cities were suddenly orphans. Mittal showed up with cash.

Then came Sidex in Romania. This one got political. There were accusations that the British Prime Minister Tony Blair helped Mittal get the deal. The press called it “Mittalgate.” But the deal went through.

Every single time, the pattern was the same. A government or a country in trouble. A steel plant bleeding money. Nobody willing to touch it. And Mittal with an offer that was low enough to seem insulting but high enough to be the best option on the table.

The $60 Million Wedding

Before we get to the big takeover, let me mention something that tells you about the scale of money involved here.

In 2004, Lakshmi Mittal’s daughter got married. The wedding was in Paris. More than 5,000 bottles of wine were served. Bollywood stars performed. Kylie Minogue sang. The estimated cost was $60 million. For a wedding.

Around the same time, he bought a mansion in the Kensington neighborhood of London from Bernie Ecclestone, the Formula One boss. Price: $130 million. For a house.

This is the kind of wealth that steel built. Not tech startups, not software, not cryptocurrency. Steel. The most basic industrial commodity you can think of.

Building the World’s Biggest Steel Company

By 2005, Mittal was done collecting individual plants. He wanted to build something bigger.

He merged three companies he controlled: LNM Holdings, Ispat International, and ISG, an American steel producer he had acquired for $4.5 billion. The combined entity became Mittal Steel. It could produce 70 million tons of steel per year. That made it the largest steel company in the world.

But Mittal was not done.

In October 2005, he bought the Ukrainian steel plant Kryvorizhstal for $4.8 billion. More capacity. More market share.

And then in January 2006, he made the move that shocked the entire industry.

The Hostile Takeover of Arcelor

Arcelor was the second-largest steel company in the world. It was European, headquartered in Luxembourg, with operations across France, Spain, Belgium. It was the pride of European steelmaking. Old money. Old industry. Old culture.

Mittal offered $20 billion to buy it. Arcelor’s board said no.

Here is the thing. It was not just a business rejection. It got personal and ugly. Arcelor’s French CEO publicly said that “the Indian does not fit our great culture.” That is almost a direct quote from the book. The European steel establishment did not want to be taken over by an Indian businessman, and they were not subtle about it.

Arcelor tried to escape by merging with Severstal, a Russian steel company instead. Anything but Mittal. They would rather sell to Russia than to India. Think about that for a second.

But Mittal did not go away. He raised his offer. He lobbied shareholders. He waited.

In June 2006, after a marathon nine-hour negotiation session, Arcelor’s board finally agreed. The final price was $34 billion. That was 45% above Mittal’s original offer. He overpaid by billions. But he got what he wanted.

The combined company became ArcelorMittal. It could produce 120 million tons of steel per year. It had 12% of the global market. $60 billion in annual sales. 320,000 employees across dozens of countries. Nothing in the steel industry had ever been that big.

Why Steel Prices Went Crazy

There is a reason Mittal could pay $34 billion for Arcelor and still come out ahead. China.

In 2000, China consumed about 15% of the world’s steel. A decade later, that number was 50%. Half of all the steel produced on the planet was going to China. They were building cities, highways, bridges, railways, skyscrapers. The construction boom was unlike anything in history.

Steel prices reflected this. In 2000, steel cost about $200 per ton. By 2008, it hit $1,100 per ton. More than five times higher. If you owned steel plants during this period, you were printing money. Mittal had spent decades buying cheap steel assets. Now the commodity itself was exploding in price. His timing, whether by luck or by vision, was perfect.

At the peak, Lakshmi Mittal was estimated to be worth $25 billion. The fifth richest person in the world. All from buying broken steel plants that nobody else wanted.

What Stays With Me

Dennin uses this chapter to show a different side of the commodity world. Most chapters in the book are about traders who bet on price movements. Mittal is not a trader. He is a builder. He does not speculate on where steel prices will go. He buys the factories that make the steel.

The pattern is identical to what Fredriksen did with tankers and fish farms in the previous chapter. Buy distressed assets. Fix them. Consolidate. Wait for the market to turn. The people who build the biggest fortunes in commodities are not the ones trading futures contracts. They are the ones who own the physical stuff.

But here is the part that bothers me. The Arcelor takeover had that ugly cultural dimension. “The Indian does not fit our great culture.” In 2006. From the CEO of a major European company. Mittal responded the only way that works in business. He made an offer so large that the shareholders could not refuse it. Money, eventually, does not care about culture or nationality or skin color. It cares about returns. And $34 billion is a return that makes prejudice very expensive to maintain.

Mittal started with his father’s small plant in Rajasthan. He ended up running a company that produced more steel than most countries. He did it by going where nobody else wanted to go. Trinidad. Mexico. Kazakhstan. Romania. Ukraine. Places in crisis. Plants that were failing. And he kept showing up with a checkbook and a plan.

That is how you build an empire in steel. Not by being flashy. By being the only person willing to buy what everyone else has given up on.

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