Steel, the great crucible of the industrial age, sounds such a dull, Old Economy business. But a titanic drama is playing out there now, as billionaire entrepreneurs battle to reshape the industry.
Lakshmi Mittal started it. He believed that steel companies needed to consolidate to get global economies of scale in production, to get more power over pricing in a notoriously cyclical industry, and to give themselves a wider value range of steels to sell in developed and emerging markets.
So the London-based, Rajasthan, India-born steel man went on an acquisition spree. He turned his obscure family steel company in northwestern India into the world's biggest steelmaker. In the process, he also made himself the fifth-richest man in the world.
But even as No. 1, Mittal Steel has just a six per cent share of the world market, with much of its output low-value commodity steel. So Mittal launched a hostile bid for the world's second-largest steelmaker, Arcelor, the rump of former state-owned European steel companies.
It is proving to be a rancorous $33 billion takeover battle, stirring national passions and shareholder dissent. Arcelor's big counterpunch has been a proposed merger with Russian steelmaker Severstal--a deal not beloved by all Arcelor shareholders and one that could leave Russian metals oligarch Alexei Mordashov owning a third of the combined company.
As well as being Russia's third-largest steelmaker, Severstal owns the Rouge mill in Michigan and has plans for an auto steel plant in Mississippi.
Steel industry speculation is that Mordashov's move was sanctioned by the Kremlin, which wants to thwart Mittal's own stated ambition to expand in Russia to get access to the country's cheap iron ore and coke, both of which steel companies use in copious volumes.
The Kremlin isn't usually keen on any oligarch moving his fortune into exile. Just ask former Yukos boss Mikhail Khodorkovsky, once a billionaire and now languishing broke in a jail on what his supporters maintain are trumped-up tax charges.
But the antiquated Russian steel industry itself is ripe for consolidation and has a potentially huge export market on its doorstep in China. The Kremlin, which is exercising increasing control over the country's natural resources, wants to make sure it is driving the process.
It is not alone in seeing the potential. Hard on the heels of the Arcelor/Severstal merger comes news that another Russian billionaire, the already expatriate Roman Abramovich, is taking a 41.3 per cent stake in Evraz Group, Russia's largest steelmaker.
Video: Molding The Steel Industry
Evraz owns three mills in Siberia, the province where Abramovich was once governor, along with iron ore and coal mines. It also has steelmaking interests in Italy and the Czech Republic. Abramovich's investment company, Millhouse, says that its Evraz stake was priced at market, which would put a price tag of at least $3 billion on it
Few doubt that by applying to Evraz the sort of Western management rigor he bought to Sibneft, his former oil company, Abramovich can turn a pretty penny on his investment.
He can well afford it. Last year, he sold Sibneft to the state-owned energy giant Gazprom for $13 billion. His two-part disposal of his 50 per cent stake in Russian Aluminium to his partner Oleg Deripaska netted him a further $5 billion.
Industry scuttlebutt has had the Evraz deal in the making for some weeks, with speculation being that Abramovich wants to combine it with the big Anglo-Dutch steelmaker Corus. That tie-up would put the merged company in the top five or six of world steelmakers--and still, by the way, keep Abramovich's fortune safely outside Russia.
However this all plays out, it looks as if three of the big six steel companies--accounting for 20 per cent of the world's steel production--will end up in the control of three extremely rich entrepreneurs.